* Strong jobs data boost dollar, stave off selling
* Euro falls broadly as peripheral bond spreads widen
* Concerns over Ireland's fiscal position escalate (Recasts, adds U.S. data, quote, changes byline, dateline; previous LONDON)
By Gertrude Chavez-Dreyfuss
NEW YORK, Nov 5 (Reuters) - The dollar rallied on Friday after an unexpectedly strong U.S. nonfarm payrolls report suggested the economy may well be on a stable road to recovery.
The U.S. data came two days after the Federal Reserve committed to inject $600 billion to boost a flagging economy and gave the greenback temporary relief from a broad sell-off.
Some investors, however, remained unconvinced that the employment numbers were sufficient to turn the dollar's fortunes around.
Data on Friday showed that the U.S. economy added 151,000 jobs in October, blowing out expectations for a 60,000 rise and the fastest pace of hiring since April 2010. For more see [ID:nN04265378].
"I don't want to draw over-hasty conclusions because I think it all depends on how sustainable these gains are," said Fabian Eliasson, vice president of currency sales at Mizuho Corporate Bank in New York.
"I want to see several months of these kind of numbers ... but the dollar is strengthening nicely and we could see a little bit of a reversal from recent dollar selling heading into the weekend."
In early trading the euro fell to session lows at $1.4032
Market participants had been selling the euro anyway as concerns over Ireland's austerity budget prompted a widening in peripheral euro zone bond spreads. The premium investors demand to hold 10-year Irish government bonds rather than German benchmarks rose to a euro lifetime high after Dublin proposed a budget some traders said was 'unrealistic'. [ID:nLDE6A40HF]
Ireland is planning to push through spending cuts and tax hikes worth six billion euros next year, the toughest budget in its history, in a last-ditch effort to convince investors it is not on the verge of a financial meltdown. [ID:nLDE6A3168]
Traders said stop-losses in the euro were hit all the way down while a surprise drop in German manufacturing orders also dented euro sentiment. [ID:nLDE6A40WR]
Some strategists believe, however, that even with sovereign debt concerns in the euro zone and a strong U.S. payrolls report, the euro's support levels against the dollar would not be challenged.
"The risk trade looks like it is being partially expressed through short euro/Australian dollar," said Alan Ruskin, global head of currency strategy at Deutsche Bank.
"The data response is the clearest sign yet that traders are looking to use the euro as well as the dollar as a funder for risk trades."
The dollar rose 0.5 percent against the yen to 81.13
The Bank of Japan earlier concluded a policy review without easing further. The yen firmed slightly after the announcement on disappointment that the bank had not unveiled any expansion of its asset buying plan in response to that of the Fed.
The dollar was up around 0.7 percent versus a currency basket <.DXY> at 76.404, bouncing from an 11-month low touched on Thursday of 75.631. (Additional reporting by Steven C. Johnson; Editing by James Dalgleish)