* Yen falls against major currencies
* Markets await U.S. stress test results later on Thursday
* Aussie, kiwi also rise as risk aversion eases
* Focus on whether ECB will announce unconventional measures
TOKYO, May 7 (Reuters) - The yen fell against major currencies on Thursday as risk aversion dropped on improving clarity about the health of the financial system amid a flurry of news ahead of results for U.S. bank stress tests.
U.S. Treasury Secretary Timothy Geithner said on Wednesday 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 need more capital once the results are released at 2100 GMT Thursday.
Regulators have told Bank of America it needs $34 billion of capital, while Citigroup needs $5 billion and the 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 news about U.S. bank stress tests with the Nikkei share average gaining 4.3 percent..
"But currencies are expected to trade in ranges as U.S. banks are not yet healthy and investors wait for further clues on the economy," Takeuchi said.
The dollar rose 0.4 percent to 98.74 yen from late U.S. trade on Wednesday.
The Australian dollar edged up 0.1 percent on the day to $0.7475 and rose 0.6 percent to 73.85 yen after touching 73.99 yen earlier, its highest in seven months.
The kiwi climbed as high as 58.14 yen, its highest in three weeks.
The market awaits policy announcements by the European Central Bank (ECB) and Bank of England (BoE) later on Thursday.
The ECB is expected to cut its main interest rate to a record low of 1 percent but markets are more focused on any alternative steps to boost the euro zone economy.
While the BoE is seen holding rates at 0.5 percent, also a record low, and it may hold off on announcing fresh plans to boost the supply of credit.
The euro was down 0.4 percent to $1.3280, after touching its highest in a month at $1.3439 on trading platform EBS on Tuesday. It was steady at 131.05 yen. (Reporting by Kaori Kaneko; Editing by Edwina Gibbs)