* Some traders see U.S. bond yields peaking
* 30-year T-notes auction, U.S. jobless claims in focus
* Australian dollar jumps on massive jobs increase
* Kiwi falls after dovish RBNZ comments
By Hideyuki Sano
TOKYO, Dec 9 (Reuters) - The dollar lost steam on Thursday as a sizzling rise in U.S. bond yields appeared to pause for now while the Australian dollar surged on data showing the country's employment is growing far faster than expected.
Ten-year U.S. Treasury yields dipped about 4 basis points in Asia after a 23 basis point surge previous day, leading some traders to think dumping of U.S. bonds may have run its course, and undermining the yield attraction of the dollar.
"Everybody is still focusing on U.S. bond yields. My hunch is that we are near a selling climax in U.S. Treasuries. Such a feeling is also in the market, dampening the dollar now," said Koichi Yoshikawa, head of forex trading at BNP Paribas in Tokyo.
Investors dumped U.S. Treasuries this week after a deal in Washington to extend tax cuts fuelled concerns of inflation and a swelling budget deficit. Some analysts said the tax cuts could boost growth by as much as a percentage point next year.
Some traders were starting to think of the climb in yields as overdone, with two-year yields rising more than 20 basis points in two days to a 4-½ month high of 0.64 percent on Wednesday, way above the Fed's short-term rate target of 0-0.25 percent.
"That's almost like you had a rate hike," Yoshikawa said.
The greenback lost 0.3 percent against a basket of major currencies. The dollar index fell to 79.77, struggling to break above the 80.00-81.00 area, which capped its November rally.
Still, some traders think there will be more position unwinding in U.S. Treasuries after many investors amassed bonds for months in expectations of massive buying by the Federal Reserve.
"This will end only when everyone has dumped their long positions. I think we are still far away from that," said a trader at a Japanese bank.
Investors' nerves will remain frayed at least until a 30-year U.S. Treasuries auction later in the day.
Traders also say weekly U.S. initial jobless claims data at 1330 GMT could trigger a rise in bond yields. The data last week showed the four-week moving average of the claims at a two-year low, stoking optimism about the U.S. recovery.
Against the yen, the dollar fell 0.3 percent to 83.83 yen, pressured by selling by Japanese exporters.
Traders said the dollar faced strong resistance around 84.40-60, an area it has repeatedly failed to break since late last month.
The euro rose 0.3 percent against the dollar to $1.3306, extending its rebound from a one-week low around $1.3180 on set on Wednesday. The euro gained momentum after hitting stop-loss orders at around $1.3280.
But its inability to hold gains above $1.3400 this week meant a probe lower was still possible, with a sustained break of $1.3180 opening the way to a test of $1.3060/50.
Traders also say concerns over euro zone countries' debt financing -- while put on a back burner after euro zone bond yields fell on the European Central Bank's buying -- could crop up at any time to hurt the euro.
The European Commission welcomed Ireland's tough 2011 austerity budget, which received its first approval from parliament, opening the way for international loans to start flowing to Dublin.
AUSSIE SURGE
The euro was also helped by a surge in the Australian dollar, which jumped nearly 1 percent at one point following the release of surprisingly strong employment data in the country.
Australian employment grew by 54,600 in November, providing a resounding counterpoint to recent soft data and an omen that interest rates may not stay on hold for too long.
The Aussie dollar last traded at $0.9864, up 0.75 percent from late U.S. levels and breaking above resistance at around $0.9855.
The currency could test Tuesday's 3-½ week high of $0.9966 if it clears resistance from the top of ichimoku cloud on charts at $0.9887.
Against the yen, the Aussie rose 0.5 percent to a 2-½ week high of 82.72 yen.
In contrast, the New Zealand dollar dropped to a one-week low at $0.7435, shedding about half a cent, after the Reserve Bank of New Zealand said it expected interest rates to rise less over the next two years than it had previously forecast.
RBNZ left rates unchanged at 3.0 percent as expected but said they should stay low for longer.
"The kiwi sagged given the much watered-down tightening bias," said Annette Beacher, head of Asia-Pacific Research at TD Securities. "We can finally confirm that we are pushing out the next rate hike from March to July." (Additional reporting by Ian Chua in Sydney and Reuters FX analysts Krishna Kumar in Sydney and Rick Lloyd in Singapore; Editing by Michael Watson)