FOREX-Dollar rises, investors bet on strong U.S. jobs data
* Dollar adds to previous day's 1.7 pct bounce vs yen
* Nonfarm payrolls the next hurdle for U.S. dollar
* Euro steady, shrugs off Berlusconi verdict
LONDON, Aug 2 (Reuters) - The dollar extended gains versus the yen on Friday, and rose against a basket of currencies as U.S. yields climbed on expectations that an upbeat jobs report will prompt the Federal Reserve to withdraw stimulus soon.
Funds were buying the U.S. currency in the European session, with the dollar rising 0.25 percent to 99.81 yen after having surged about 1.7 percent on Thursday, its biggest one-day percentage gain in around four months. The dollar index was up on the day at 82.406.
Weekly jobless claims and manufacturing for July had shown the world's largest economy was recovering steadily. The robust data pushed U.S. yields higher and widened the gap over German, British and Japanese bonds and buoyed the dollar.
Investors are looking to nonfarm payrolls data, to be released at 1230 GMT, with expectations that July will show a solid rise. A Reuters survey pointed to an increase of 184,000 in nonfarm payrolls, with the jobless rate seen dropping to 7.5 percent from 7.6 percent.
"A 200,000 plus outcome and 0.2 percentage point fall in the unemployment rate to 7.4 percent would take 10-year U.S. yields above 2.74 percent - the high seen after June's labour data," said Tom Levinson, strategist at ING.
That would intensify talk that the Fed may start withdrawing stimulus in September and see the dollar index hit 83, he added.
The dollar could slide if the data is below expectations.
"A weak report that causes expectations of Fed tapering to shift later has the potential to make the dollar tumble against the Australian and Brazilian currencies and perhaps the yen," said Greg Anderson, currency strategist at BMO Capital Markets.
The Fed's statement on Wednesday offered no fresh hints that it was preparing to reduce its monetary stimulus at its next policy meeting in September, and market players continue to watch economic data for clues on when such tapering might start.
The euro was flat at $1.3212, well below a six-week high of $1.3345 hit on Wednesday. Investors shrugged off former Italian Prime Minister Silvio Berlusconi's conviction for tax fraud as many perceived it did not present an immediate threat to the government in Rome.
The euro had come under pressure on Thursday after the European Central Bank left interest rates at a record low 0.5 percent and affirmed they will remain there for some time to come.