TOKYO, Jan 8 The yen rose on Monday, benefiting from growing expectations that the Bank o

TOKYO, Jan 8 (Reuters) The yen rose on Monday, benefiting from growing expectations that the Bank of Japan could bump up interest rates as early as next week.

The dollar steadied against currencies other than the yen, keeping gains made in the wake of a report showing surprising growth in U.S. jobs, which led the market to scale back forecasts that the Federal Reserve will cut rates in coming months.

But trade in Asia was dictated by the buying back of the yen against the euro as traders continued to unwind carry trades that had helped to push the Japanese currency to successive record lows against the single European currency.

''Investors are trying to reduce some of the risk they are holding,'' said Sharada Selvanathan, a currency strategist at BNP Paribas in Singapore.

''There might be continued unwinding of positions in the next few days but I don't think this is going to lead to any kind of broad-based unwinding of carry trades,'' she said.

The yen rose against the high-yielding Australian and New Zealand dollars for a third straight session.

The Aussie and kiwi have been among the beneficiaries of the carry trade, in which investors borrow the low-yielding yen to buy higher yielders.

In early Tokyo trade, the dollar was at 118.30 yen, down 0.3 percent from the level in late U.S. trade on Friday.

Trade was thin, with many dealers in Tokyo away due to a national holiday in Japan.

The euro fell 0.3 percent to 153.80 yen, well off the record high of 158.06 struck just last week.

The single European currency was little changed at $1.3005, in sight of the six-week low struck around $1.2980 on Friday after the U.S. jobs report.

The Labor Department said the U.S. economy generated 167,000 new jobs in December, well above market expectations of a rise of 100,000.

All 21 primary dealers in a poll taken after the jobs data said they expected the Fed to keep interest rates steady at the central bank's next monetary policy meeting on Jan. 30-31.

But 14 of the 21 said they see the Fed reducing rates this year as core inflation moderates and a U.S. housing slowdown impinges on economic growth.

In contrast, the yen has found favour on growing expectations that the BOJ may boost Japanese rates from the current 0.25 percent at a two-day policy meeting that starts on Jan. 17.

REUTERS DKS PM0733