FOREX-Euro at 4-mth high vs dlr; U.S. jobs data awaited

* Euro at 4-mth high vs USD, yen on ECB rate rise view

* Dollar on back foot, investors await U.S. payrolls

* Analysts: UST yields need to rise on data to boost USD

By Naomi Tajitsu

LONDON, March 4 (Reuters) - The euro hit a four-month high against the dollar on Friday on expectations euro zone interest rates may rise next month, while investors waited to see whether strong U.S. jobs data would offer the greenback some respite.

The central forecast in a Reuters poll was for 185,000 new jobs to have been added to the economy last month, after an addition of 36,000 in January.

With the euro hovering just shy of $1.40, analysts looked to movements in U.S. yields to drive the dollar after the jobs data, due at 1330 GMT.

"We should see a better non-farm payrolls figure, but if U.S. yields don't rise, it won't help the dollar," said Marcus Hettinger, global FX strategist at Credit Suisse in Zurich.

"Interest rate differentials ... are playing in favour for the euro, so we could see a break above $1.40 any time now."

The euro stayed well bid after European Central Bank President Jean-Claude Trichet stunned investors on Thursday by saying a rate rise in April was a possibility. [ID:nLDE7220KJ]

The euro edged up to $1.3978 on trading platform EBS, its strongest level since early November. Gains were capped, however, with traders citing a barrier at $1.40 and offers to sell the single currency looming just above there.

Analysts said the euro was poised for a move higher, though, as the ECB's announcement, which fortified the view the ECB will raise rates well before the Federal Reserve, had widened the gap between euro zone and U.S. government bond yields.

At the same time, Paul Robinson, head of European FX Research at Barclays Capital, said dollar risks were skewed to the downside heading into payrolls and that the U.S. currency could face more selling than usual if the figure comes in weak.

"What makes today's nonfarm payrolls data more interesting is the very different views of the world held by the ECB and Federal Reserve," he said.

ECB rate speculation has pushed yields on two-year German government bonds -- the maturity most sensitive to official rate moves -- roughly a full percentage point higher than those of their U.S. counterparts this week. The spread between the two is now at its widest since January 2009.

Euro interest rate swaps soared across the curve with the two-year rate hitting around 2.33 percent, highs not seen since early 2009.

While rate speculation has boosted the euro, some analysts pointed out the dangers of tightening policy when some euro zone economies are suffering because of debt problems.

The euro had support above its 200-week moving average around $1.3957, and a weekly close above that would pave the way for a move higher. Near-term resistance was seen around $1.3980, however, the 78.6 percent retracement of the euro's down-move from November.

The euro also hit a five-month high against the yen of 115.55 yen, according to Reuters data.

BUY ON DIPS

Market participants acknowledged the euro may stumble if European officials fail to reach a consensus on a lasting solution to euro zone debt problems when they meet this month.

But some forex managers said they would be happy to pick up the single currency if it dips on such concerns, as they were confident political differences within the region were unlikely to derail overall stability.

"We like the euro," said Thanos Papasavvas, head of currency management at Investec, arguing that even the economies of some weaker euro zone countries were starting to improve, while Europe would eventually hammer out a permanent debt rescue plan.

He added: "We would be interested in increasing our euro positions more on any correction to $1.34-35."

But the shared currency slipped 0.3 percent on the day to 1.2967 Swiss francs, which rallied after Swiss National Bank Vice Chairman Thomas Jordan said rates in the country will have to rise in the medium term. [ID:nWEB3522]

The dollar was up 0.3 percent at 82.69 yen, but was at 76.493 against a currency basket <.DXY>, little changed on the day and hovering near a four-month low hit on Thursday. (Additional reporting by Niki O'Callaghan and Jessica Mortimer; Editing by Catherine Evans)