FOREX-Yen down as U.S. avoids 'fiscal cliff'

* U.S. Congress approves deal to avoid "fiscal cliff"

* Yen and dollar down broadly as risky assets rally

* Euro/yen trims gains after hitting highest since July 2011

* Dollar/yen touches highest level since July 2010

By Masayuki Kitano

SINGAPORE, Jan 2 (Reuters) - The yen hit its lowest level since July 2011 versus the euro on Wednesday as U.S. lawmakers passed a bill to avoid the "fiscal cliff", bolstering investors' appetite for risky assets.

The U.S. Congress approved a rare tax increase on Tuesday that will hit the nation's wealthiest households in a bipartisan budget deal that stops the world's largest economy from falling into a deep fiscal crisis and recession.

The euro rose to as high as 115.995 yen on trading platform EBS, its highest level against the Japanese currency since July 2011. After trimming some of its gains, the euro was up about 1.1 percent for the day at 115.65 yen.

The yen's slide started earlier in the Asian trading session on Wednesday as it became increasingly likely that the U.S. "fiscal cliff" of steep tax increases and spending cuts would be avoided.

"The market is basically in risk-on mode, with Asian equities doing great, the euro being bought and the yen falling across the board," said a trader for a Japanese bank in Singapore.

The yen fell broadly, helping lift the dollar to as high as 87.30 yen, the greenback's highest level against the Japanese currency since July 2010.

The improvement in investor risk appetite added to pressure against the Japanese currency, which has been dogged by expectations that a new Japanese government led by Prime Minister Shinzo Abe would push the Bank of Japan into more forceful monetary easing to beat deflation.

The safe haven dollar fell broadly, with the euro rising 0.5 percent to $1.3266, and the Australian dollar climbing 0.6 percent to $1.0461.