NEW YORK, June 24 (Reuters) - The yen rose against the dollar and euro on Thursday as a less optimistic outlook on growth from the U.S. Federal Reserve dented risk appetite, with the single currency further hampered by Greek debt markets.

Concerns over Greece hung over the euro zone as the cost of protecting its government debt against default hit a record high.

U.S. economic reports on weekly initial jobless claims and durable goods orders for May came in largely in line with expectations and saw the dollar pare gains against the euro and extend declines against the yen.

The dollar came under pressure in Asian trading as investors initially took the view the Fed's renewed pledge to keep rates on hold for an extended period would be a positive for the world economy.

European investors chose to focus on the Fed's scaling back of its assessment of the pace of recovery, leading them to buy the yen.

The outlook from the Fed was more negative for interest rates and the economy than it was before, said Joseph Trevisani, chief market analyst at FX Solutions in Saddle River, New Jersey.

In a statement at the end of a two-day meeting, the Fed took note of pockets of weakness in the recovery, and also issued a cautionary note about volatile markets in light of Europe's debt woes.

The concerns over peripheral Europe increased this morning, and the market is more focused on that than U.S. data, said Jessica Hoversen, a fixed income and currency analyst at MF Global in Chicago.

The euro was down 0.7 percent versus the yen EURJPY= at 109.82 yen. The dollar fell 0.6 percent to 89.27 yen, after earlier hitting a one-month low JPY=.

The euro fell 0.1 percent against the dollar EUR= at $1.2306, having risen to $1.2351 in Asia. Traders reported demand at $1.2270, which supported the downside though the session low posted at $1.2263.

Some of the euro's rally off session lows was for technical reasons, said Boris Schlossberg, director of FX research at GFT in New York.

Once the euro began gaining upside momentum, investors who had bet against the euro were forced to buy the single currency to prevent further losses, Schlossberg said.

Sterling rose to a 19-month high versus the euro EURGBP=. British assets were still being bolstered by Tuesday's tough budget, which investors perceive as necessary to tackle a huge deficit as fiscal worries plague the euro zone.

The Aussie dollar AUD= reversed gains after rising as high as $0.8771 after Australia's ruling Labor Party elected a new prime minister in Julia Gillard, in a bid to avoid election defeat later this year.

Gillard immediately offered to end a bitter dispute over a controversial super profits mining tax, saying she would throw open the door for fresh negotiations. But she stressed miners should pay more tax.

The Aussie slipped back to trade down 1 percent on the day at $0.8655.

I expect the political developments in Australia to be supportive for the Australian dollar, but today it's all about the downturn in risk appetite, said Gavin Friend, currency strategist at National Australia Bank. (Reporting by Nick Olivari; Editing by Andrew Hay)