FOREX-Dollar nears 15-yr low vs yen, down vs euro on jobs

* US payrolls fall more than expected

* US dollar hits 8-month low vs yen, nears 15-year trough

* Euro rises to three-month peak above $1.33

* Sterling nears 6-month peak around $1.60

* Markets worry weak US growth could spark Fed action (Updates prices)

By Steven C. Johnson

NEW YORK, Aug 6 (Reuters) - The U.S. dollar approached a 15-year low against the yen on Friday and fell against the euro after data showed the United States shed twice as many jobs in July as economists expected, adding to worries about recovery.

While U.S. employers did add 71,000 private sector jobs, that was below forecasts for a 90,000 gain, helping to push the euro to a three-month high above $1.33. The dollar fell to 85.03 yen , its lowest level since November and near a 15-year trough beneath 85. Sterling hit a six-month high near $1.60 .

For more on the data, please see [ID:nN05598486].

The jobs report "is really going to deepen concerns about the health of the labor market, and that increases the odds of the Federal Reserve having to implement fresh stimulus measures to jump start the recovery," said Joe Manimbo, analyst at Travelex Global Business Payments in Washington. "Nothing in there to argue for a firmer dollar."

The data also drove two-year U.S. Treasury yields to the latest in a string of record lows, further undermining the dollar's yield appeal.

Analysts said things don't look likely to get better for the greenback ahead of a Federal Reserve policy meeting on Tuesday. A string of weak U.S. economic data fed speculation this week that the central bank could renew Treasury and mortgage bond purchases to jolt the economy back to health.

"It's just not safe to hold dollars. Quantitative easing is back on the table and it will push yields even lower," said Douglas Borthwick, head trader at Faros Trading in Stamford, Connecticut. "There are very few reasons out there to buy it."

WATCHING THE YEN

The dollar was down 0.7 percent at 85.20 yen . It was was near a 15-year low of 84.81 yen and its all-time trough below 80 yen, according to Reuters data.

Support around 85 yen has held despite a number of assaults on the level. But Boris Schlossberg, director of research at GFT Forex in New York, said it will eventually break, "if not today, then early next week, as currency traders price in declining yields in the U.S. bond market."

A dip below 85 yen could increase volatility and push Japanese officials to try to talk down the yen.

Several lawmakers have warned that action may be warranted to weaken the yen and restore Japanese trade competitiveness, though analysts think it would take an extremely rapid rise to trigger outright intervention.

EURO, STERLING RISE

The euro was last up 0.8 percent at $1.3296 after earlier hitting $1.3333 , its highest level since May. A close above $1.3125, the 38.2 percent retracement of the euro's November-to-June slide, looks likely and, strategists said, would be a bullish sign pointing to more euro gains.

Sterling rose 0.6 percent to $1.5999, its best showing against the greenback since February. Traders said the $1.5910 was now seen as support should the pound retreat.

The dollar rose against its Canadian counterpart after data showed Canada's economy shed 9,300 jobs in July, compared to forecasts for a 15,000 gain. [ID:nSCL6JE64E]

(Additional reporting by Nick Olivari and Vivianne Rodrigues; Editing by Andrea Ricci)