* Dollar supported ahead of U.S. jobs report
* Also helped by U.S. regulators warning banks on rate risks
* Japan PM says the govt should not comment on fx rates
By Rika Otsuka
Jan 8 (Reuters) - The dollar hit a four-month high against the yen on Friday on growing expectations that a key U.S. jobs report would point to an improving economy.
The greenback also received help from U.S. regulators urging banks to protect themselves against hikes in interest rates, supporting views that the Federal Reserves will start raising interest rates this year.
But the dollar quickly gave back gains against the yen after Japanese Prime Minister Yukio Hatoyama said the government should not comment on foreign exchange rates.
The remark came after the country's new finance minister, Naoto Kan, said on Thursday a weaker yen would be favourable and that he would work with the Bank of Japan to get it to an appropriate level..
The dollar edged up 0.1 percent to 77.977 against a basket of six major currencies. It rose the previous day on a stronger-than-expected weekly U.S. initial jobless claims report that added to the view that the U.S. economy is continuing to improve.
"The potential for the first positive non-farm payrolls print since December 2007 has the U.S. dollar in pole position, aided by its main competitors either spinning into the wall, or trying to change drivers at full speed," said David Watt, senior foreign currency analyst at RBC Capital.
Forecasts for payrolls have been creeping higher all week and the median is now for a flat outcome, with some as high as a 100,000 rise.
An upbeat payrolls report would fuel talk of an early tightening from the Federal Reserve and perhaps discourage leveraged positions in carry currencies and commodities.
On the other hand, any recovery in payrolls would brighten the outlook for U.S. and global growth, and thus support demand for commodities in the long run.
The euro was little changed from late U.S. trade at $1.4317, and not far from a recent low of $1.4257 struck on January 4, with investors increasingly positioning for the U.S. payrolls data.
Speaking after his appointment as Japan's finance minister, Kan said on Thursday many Japanese firms were in favour of dollar/yen around 95 yen, higher than the pair traded in late 2009.
The comments raised the possibility of intervention by Japanese authorities if the yen strengthens, sparking a yen sell-off.
The dollar was barely changed from late U.S. trade at 93.33 yen, having risen to as high as 93.78 yen on trading platform EBS, its strongest level since late August.
"In addition to comments Kan made yesterday, the dollar got a lift from the news that U.S. banks warned about the risk of higher interest rates," said a forex trader at a Japanese trust bank. "The report helped trigger stop-loss orders, boosting the U.S. currency in early Asian trade." (Additional reporting by Anirban Nag in Sydney; Editing by Joseph Radford)