WELLINGTON/SYDNEY, Oct 11 (Reuters) - The Australian dollar gained on the greenback on Thursday as a strong employment gain was matched by more people looking for work sending the jobless rate to a two-year high, keeping expectations for lower rates in Australia in play.
* Australian employment easily beat expectations, rising 14,500 vs forecasts for 3,750 jobs. But jobless rate surprised by rising to 5.4 pct, highest since April 2010, from 5.1 pct in August and above forecasts of 5.3 pct.
* The Aussie jumped up more than a third of cent to a near one-week high of $1.0266 from $1.0223 before the data, before steadying around $1.0250.
* Interbank futures imply rates at 3 percent by December with a better than even chance of a cut next month, but expectations were trimmed after the data.
* Earlier, Aussie lifted by firmer iron-ore prices , bringing gains this week to nearly 13 pct. It has recouped half of the huge fall suffered in July and August.
* Aussie seen testing resistance around $1.0275, then $1.0295, with support holding around Oct 9 low of $1.0175.
* NZ dollar last at $0.8158, from $0.8173 before the job data, pressured by cross buying in Aussie against the kiwi .
* Aussie/kiwi pair last NZ$1.2550, after hitting NZ$1.2573, highest reading in almost two weeks. The cross hit a one year low of NZ$1.2361 just last week.
* Solid kiwi support against greenback at around $0.8150, and more sturdily at $0.8234, while $0.8190 continues to cap the top side.
* Kiwi down 1.7 pct vs the greenback so far this month, vs Aussie's 1.4 pct drop. Aussie has narrowed its losses with the pullback in iron-ore prices.
* Kiwi unmoved by subdued local data. A manufacturing survey shows activity nudges higher in September but remains in contraction for a fourth consecutive month.
* In addition, consumer confidence dips for a second month in October, a monthly survey shows. Latest food price index points to benign inflation, with prices down, all pointing to a steady rate outlook into next year. See
* NZ Finance Minister Bill English reiterates the government on track to return to budget surplus in three years. Markets have been uncertain about the goal after he did not specifically repeat the plan in the government's 2011/12 financial statement on Wednesday.
* NZ government bonds softer, with yields up 1 basis point along the curve. Still, solid demand for NZ bonds at the latest auction.
* Australian government bond futures higher with three-year contract up 0.010 points at 97.640, and the 10-year contract 0.05 point higher at 97.065.
((Australia/New Zealand bureaux)(+61 2 9373 1800/+64 4 802 7980))
Keywords: MARKETS AUSTRALIA NEWZEALAND/FOREX