* Yen falls across the board after US jobs data
* U.S. Feb payrolls fall 36,000, less than expected
* BOJ may debate easing again this month-sources (Updates prices, adds comment)
By Wanfeng Zhou
NEW YORK, March 5 (Reuters) - The dollar rose against the yen on Friday after a government report showed U.S. employers cut fewer jobs than expected last month, stoking optimism about an economic recovery.
The Japanese currency also dropped versus the euro and higher-yielding currencies such as the Australian and New Zealand dollars as the data encouraged investors to buy risky assets funded by cheaply borrowed yen.
The U.S. economy shed a smaller-than-expected 36,000 jobs in February, the Labor Department said, leaving the unemployment rate unchanged at 9.7 percent. Analysts polled by Reuters expected payrolls to drop by 50,000, with the jobless rate edging up to 9.8 percent.
"It was a risk appetite event," said Michael Woolfolk, senior currency strategist at BNY Mellon in New York. "The fact that the U.S. labor market is in better shape than we were thinking supports the U.S. recovery story and it encourages market participants to put on risky trades."
The dollar rose as high as 90.52 yen, according to Reuters data, and was last at 90.38 yen, up 1.5 percent on the day.
U.S. short-term interest rate futures traders boosted expectations the Federal Reserve will raise its key target rate after the jobs data.
But some analysts remained cautions.
"Overall this is a dollar-positive number, which suggests the U.S. economy is on its way to recovery," said Richard Franulovich, senior currency strategist at Westpac in New York. "This though would not move the Federal Reserve to bring forward their interest rate hikes. I think they would have to wait for three to four months of positive employment numbers."
The euro rose 1.6 percent to 122.93 yen and the Australian dollar jumped 2.3 percent to 82.09 yen.
The Japanese currency also came under pressure after sources said the Bank of Japan was likely to debate this month whether to ease its ultra-loose monetary policy again as it remained under government pressure to help pull Japan out of deflation.
Comments from Chinese Premier Wen Jiabao that China would stick to an appropriately easy monetary stance and a proactive fiscal policy also helped boost investors' appetite for risky trades.
Against the greenback, the euro hit a session low of $1.3529, according to Reuters data, and last traded at $1.3603, up 0.2 percent on the day.
Concerns about debt problems in Greece eased after a sale of 10-year bonds on Thursday attracted strong demand. The spread between yields on Greek government bonds and euro zone benchmark German bunds narrowed on Friday.
The euro zone has the instruments it needs to help countries in trouble and will use them when needed, Eurogroup Chairman Jean-Claude Juncker said on Friday.
Traders were watching for the outcome of a meeting between German Chancellor Angela Merkel and Greek Prime Minister George Papandreou in Berlin on Friday. Merkel said on Wednesday she would offer no financial aid to Greece. The two leaders were scheduled to hold a news conference at 12:30 p.m. (1730 GMT).
The ICE Futures U.S. dollar index, which tracks the greenback versus a basket of currencies, was flat at 80.535. (Additional reporting by Gertrude Chavez-Dreyfuss and Nick Olivari) (Editing by Theodore d'Afflisio)