* Aussie hits 7-month highs vs dollar, yen after jobs data
* Markets await U.S. bank stress test results on Thursday
* Focus on whether ECB will announce unconventional measures
TOKYO, May 7 (Reuters) - The yen fell against other major currencies on Thursday as risk aversion lessened on improving clarity about the health of the financial system amid a flurry of news ahead of results of U.S. bank stress tests.
The Australian dollar hit its highest in seven months against the dollar and the yen after data showed Australian employment jumped against all expectations in April, pulling the jobless rate down and throwing into doubt the need for further interest rate cuts.
The New Zealand dollar also rose after unemployment figures for the first quarter were not as bad as expected.
U.S. Treasury Secretary Timothy Geithner said on Wednesday that none of the 19 banks being examined under stress tests are at risk of insolvency.
But about half of the 19 largest U.S. banks are expected to be shown to need more capital when the results are released at 2100 GMT on Thursday.
Regulators have told Bank of America it needs $34 billion of capital, while Citigroup needs $5 billion and auto and mortgage lender GMAC LLC needs $11.5 billion, according to people familiar with the matter.
"The yen was sold, especially against higher-yielding currencies, as risk aversion fell on the view that the stress tests probably won't be as bad as expected and on data that suggested the worst for the U.S. economy may be over," said Akira Takeuchi, a manager at Chuo Mitsui Trust and Banking.
The pace of private-sector U.S. job losses slowed drastically in April in figures that precede Friday's more comprehensive non-farm payrolls report by the government.
Stock markets also rallied on the news about the U.S. bank stress tests with the Nikkei share average gaining 4.5 percent..
"But currencies are expected to trade in ranges as U.S. banks are not yet healthy and investors await further clues on the economy," Takeuchi said.
The dollar rose to 98.65 yen, up 0.3 percent from late U.S. trade on Wednesday.
The Australian dollar rose 1.0 percent to $ 0.7548 after touching $0.7563, its highest since early October, following the employment data. It also hit a seven-month high of 74.63 yen.
The kiwi was up 0.9 percent at $0.5900 and climbed 1.3 percent to 58.17 yen.
The market awaits policy announcements by the European Central Bank (ECB) and Bank of England (BoE) later on Thursday.
The currency market has priced in that the ECB is expected to cut its main interest rate to a record low of 1 percent and players were more focused on any alternative steps to boost the euro zone economy.
The BoE is seen holding rates at 0.5 percent, also a record low, and likely holding off on announcing fresh plans to boost the supply of credit.
"The euro is solid and is expected to keep its tone even after the ECB announces some additional measures besides rate cuts as the currency is underpinned by views on the global economic recovery," said a trader at a Japanese bank.
The euro was down 0.2 percent at $1.3310, after touching its highest in a month at $1.3439 on trading platform EBS on Tuesday. It was up 0.2 percent at 131.30 yen, lifted by the yen's fall against other currencies, a trader said. (Reporting by Kaori Kaneko; Editing by Michael Watson)