Yen broadly weaker, dollar awaits US payrolls

LONDON, Dec 8 (Reuters) The yen fell broadly after weak Japanese data on Friday, while the dollar hugged tight ranges ahead of a closely-watched U.S. employment report which could indicate whether U.S. interest rates are likely to come down.

Particular attention was being paid to U.S. non-farm payrolls for November, due at 1330 GMT, after data from ADP Employer Services earlier in the week showed surprising growth in private-sector jobs, pointing to healthy job creation.

The jobs data is expected to show a rise of 110,000, but analysts point out a downside risk on the number and thus for the dollar.

''(The yen move) could be a bit of a lagged reaction (to Japanese data) but it could be just positioning ahead of jobs data.

The market is divided (on BOJ rates),'' said Adarsh Sinha, currency strategist at Barclays Capital.

''Whisper numbers (on jobs) are sub 100. Market sentiment has shifted obviously for dollar bearishness. Even if you get a strong number the dollar is unlikely to sustain gains.'' By 1235 GMT, the yen was down 0.3 percent at 115.55 per dollar.

It was also down 0.2 percent at 153.52 per euro, within a yen of its record low.

The euro was steady at $1.3281, less than a cent from this week's 20-month high.

Traders are betting U.S employers added about 85,800 jobs in November, according to a closely-watched derivatives auction on the data.

''We expect today's U.S. jobs numbers to re-enforce market expectations for easier U.S. monetary policy in Q1,'' UBS said in a note to clients.

On Thursday, the European Central Bank raised interest rates to 3.5 percent in a widely expected move, but ECB President Jean-Claude Trichet sent mixed signals on the outlook for interest rates next year.

JAPAN RATES Data showed the Japanese economy grew 0.2 percent on a quarterly basis in July-September, less than a preliminary reading of 0.5 percent growth. Forecasts were for a revised growth reading of 0.3 percent.

Japan's core private-sector machinery orders also came below the consensus.

The BOJ's tankan quarterly poll on business sentiment due in a week's time was likely to be the factor that will determine whether the central bank lifts rates at its policy meeting on Dec. 18-19 or holds off until next month.

Despite downbeat data, yen overnight index swaps suggest that traders see a better than even chance of the BOJ raising interest rates from 0.25 percent this month.

The U.S. currency has faced broad pressure due to concern that a lower Fed funds rate would shrink its yield advantage against rival currencies as other central banks raise rates.

Current consensus is tipped in favour of the U.S. central bank cutting rates from the current 5.25 percent when it next moves.

REUTERS SBA RS1901