* Yen hits lowest level vs dollar since late April
* Euro gains on prospects of euro zone, IMF deal on Greece
* Prospects of U.S. fiscal cliff solution lifts riskier currencies
LONDON, Nov 19 (Reuters) - The yen fell to a seven-month low versus the dollar on Monday on concerns about more monetary easing in Japan while raised chances of a resolution to the U.S. 'fiscal cliff' helped the euro and riskier currencies.
The euro was also lifted by the prospects of euro zone finance ministers agreeing with the International Monetary Fund on a two-year funding deal for Greece.
The dollar was steady at 81.28 yen, having risen as high as 81.59 yen on trading platform EBS, its highest level since April 25.
Investors have dumped the yen after elections were called for Dec. 16 and the leader of the opposition Liberal Democratic Party (LDP), which is expected to win, called on the BOJ to print "unlimited yen" and set rates at zero or below.
But investors were wary of pushing it much lower before a Bank of Japan policy announcement on Tuesday, where most analysts expect it will refrain from announcing additional monetary easing.
"Continued talk and questions over potential changes for the BOJ has weighed on the yen. It's most unlikely the BOJ will make major changes this meeting, but the trend (for the yen) seems to be changing," said Audrey Childe-Freeman, head of foreign exchange strategy at BMO Capital Markets.
Traders cited stop loss buy orders at 81.75 and 82.00 yen, with option barriers reported at those levels too. However, an options expiry at 81.25 yen due later in the day may keep the dollar hovering close to that level.
The euro rose 0.2 percent to $1.2771, recovering from a two-and-a-half month low of $1.2661 reached last week, although it remained stuck below chart resistance at its 200-day moving average of $1.2807.
European Central Bank policymaker Joerg Asmussen said on Sunday the euro zone should agree next week on two years of funding for Greece, while German Finance Minister Wolfgang Schaeuble said he was banking on a deal.
However, euro zone officials, who meet on Tuesday, may encounter opposition from the International Monetary Fund, which wants a permanent solution to Greece's debt problems.
"This week, the euro is likely to be well bid, provided we get a positive outcome from the meeting of euro zone finance ministers," said BMO's Childe-Freeman.
Analysts at Morgan Stanley recommended buying the euro at $1.2730, with a target of $1.33 and a stop at $1.2650.
They said they expected progress towards a compromise on the next payment of funds for Greece, which should support the euro, as well as anticipation that Spain would apply for a bailout, paving the way for the European Central Bank to buy its bonds.
Signs negotiations to overcome major fiscal policy disagreement in the United States had started well lifted equities and also supported demand for riskier currencies, including the euro.
On Friday, leaders of the U.S. Senate and House said they would be flexible in efforts to settle fiscal policy differences to avert a $600 billion 'fiscal cliff' of tax hikes and spending cuts.
The euro rose 0.2 percent against the yen to 103.78 yen , having earlier hit a three-week high of 104.15 yen.
Some market participants said the yen may find support after last week's 2.4 percent drop against the dollar, the Japanese currency's biggest weekly percentage drop in nine months.
But given the potential for more monetary easing later, they said the yen could fall further over a longer-term horizon.
"We've travelled too far, too fast over the last week or so," said Gareth Berry, a strategist for UBS in Singapore.
But he added: "On a six-month view, dollar/yen higher is a great trade".