* Sterling edges up, helped by housing data, equity gains
* Nationwide says UK house prices rose 0.5 percent m/m in May
* UK services PMI up slightly, but new business drops
* Pound hits 3-week high vs low-yielding yen
LONDON, June 3 (Reuters) - Sterling edged higher against the dollar and the euro on Thursday, helped by a survey showing a rise in UK house prices, while a rebound in equities broadly lifted currencies seen as higher-risk, including sterling.
Gains were limited, however, as a poll showed activity in the UK services sector grinding higher in May, but also revealed a sharp drop in new business and a fall in hiring.
This took the shine off earlier data from Nationwide showing house prices in Britain rose by 0.5 percent in May, half the rate of the previous two months but enough to lift property values within 10 percent of their 2007 peak.
Sterling rose against the dollar and the low-yielding yen in tandem with gains in other higher risk currencies such as the Australian dollar, as equities rose on growing hopes the global economy is improving.
"It's a 'risk-on' day, with commodity currencies bid and the dollar coming off, which is helping sterling, but it seems the PMI data might have knocked the steam out of it a bit," said Chris Turner, currency strategist at ING.
At 1131 GMT, sterling was up 0.1 percent against the dollar at $1.4659, off a high for the day of $1.4744.
The euro dipped 0.1 percent to 83.48 pence though it stayed shy of an 18-month low of 82.80 pence hit on Wednesday.
"Now that the single currency has closed below the 84.00 pence level, which had supported it until recently, ... further euro losses continue to look likely," Michael Hewson, analyst at CMC Markets said in a note to clients.
He added that further losses could see it fall towards 81.70 pence, the 50 percent retracement of the euro's move up from the 2007 lows just above 65 pence to the 2008 highs around 98 pence.
Although concerns remain about the UK, particularly its high debt levels, sterling has gained around 5 percent since the euro peaked just above 88 pence in early May as investors consider the UK economy will probably fare better than the euro zone's.
EQUITY BOOST
Sterling was helped by a 1.6 percent rise in UK shares as investors looked ahead to the release of key U.S. jobs data on Friday. 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.
Equity gains pressured the low-yielding yen in particular as investors sought riskier assets, helping push sterling to a three-week high against the Japanese currency of 136.43 yen.
(Reporting by Jessica Mortimer; editing by Patrick Graham)