* Low-yielding yen slips on renewed global appetite for risk
* Political uncertainty in Japan also weighing
* Euro/dollar hemmed in by option expiries
(Changes lead, byline, adds detail)
By Neal Armstrong
LONDON, June 3 (Reuters) - The yen fell against its major rivals on Thursday amid renewed appetite for risk in global markets, with political uncertainty in Japan also weighing on the currency.
Speculation that there would be a strong reading of U.S. jobs data due on Friday prompted demand for riskier currencies, pushing the Australian and New Zealand dollars higher. Investors tend to sell the low-yielding yen to fund such investments.
"Financial market conditions have stabilised in the near-term. There's renewed risk-taking and that leads to a weaker yen," said Lee Hardman, currency analyst at BTM-UFJ.
At 1115 GMT, the dollar was trading with gains of around 0.5 percent versus the yen at 92.65 yen. The euro also held gains of around 0.5 percent versus the Japanese currency at 113.50 yen having earlier rallied above 114.00.
Stock markets around the world have been stabilising after deep losses last month on concerns about Greece's debt woes.
European shares rose 1.8 percent, pulling further away from a nine-month low hit last week.
"Equity markets are looking better today," said Marcus Hettinger, global currency strategist at Credit Suisse in Zurich. "At least for today, we're seeing some stabilisation in risk appetite."
Traders also took speculation that Japan's next prime minister would take a tougher stance in fighting the yen's strength as an opportunity to trim long positions in the currency.
Finance minister and candidate for ruling party head -- and hence the premiership -- Naoto Kan surprised markets earlier this year by saying that he wanted the yen to weaken more and that most businesses were in favour of a dollar/yen rate around 95 yen.
"Political uncertainty in Japan is also weighing on the yen in the short-term," added BTM-UFJ's Hardman.
The euro traded close to flat versus the dollar at $1.2250, slipping from day's high of $1.2326 as traders said option expiries at $1.2300 and $1.2200 were set to contain price action into the 1400GMT New York expiry time.
The single currency has found its footing after sliding as low as $1.2110 on Tuesday, its weakest in more than four years. The Australian dollar rallied 0.8 percent versus the U.S. dollar to $0.8478. with the New Zealand dollar gaining around 0.5 percent against the greenback at $0.6850.
The dollar was also trading close to unchanged versus a basket of currencies at 86.776.
PAYROLLS EXPECTATIONS
Investors took heart from U.S. data on Wednesday, which showed surprisingly strong pending home sales for April and a jump in May auto sales.
Expectations of a strong U.S. payrolls report on Friday also helped to whet the market's appetite for riskier assets. A Reuters poll shows 513,000 jobs were created in May.
Some economists are anticipating an even stronger figure, with BNP Paribas upgrading its forecast to +615,000, while U.S. President Barack Obama also added to optimism, saying on Wednesday the report would show strong growth
But given such lofty expectations, analysts at Paribas said caution would be required going into the data given the heavy bullish positioning.
"The market may be setting itself up for some near-term volatility with the risk that investors are becoming overly bullish on the labour market report with a 'buy the rumour sell the fact' scenario appearing to build," they said in a note.
(Additional reporting by Naomi Tajitsu, editing by Patrick Graham)