* Euro hits six-week highs vs dollar, five-year peak on yen
* Euro supported by higher money market rates in euro zone
* Dollar falls to 1-1/2 month low vs Swiss franc
LONDON, Dec 9 (Reuters) - The euro hit a six-week high against the dollar and a five-year peak versus the yen on Monday, helped by tighter money market conditions in the euro zone, which offset weak data from the region. The euro rose as high as $1.3748 in thin early trade in Asia. It was trading at $1.3720 in Europe, firmer on the day as short-term interest rates in the euro zone money market edged up with the chances of more easing by the European Central Bank looking slim for now. Against the yen, the euro climbed to 141.55, reaching highs not see since October 2008. It was last trading at 141.42 yen, up 0.3 percent on the day, ignoring a drop in euro zone sentiment and a fall in German industrial output.
"It is possible for the euro to rise towards $1.38 where we think it will be capped," said Manuel Oliveri, FX strategist at Credit Agricole. "Chances that the ECB will lower the deposit rate to negative are falling and this is supporting the euro." The euro's rise nudged the dollar index down 0.1 percent to 80.229, having hit a near six-week low of 80.169 earlier in the day. The dollar tracked lower U.S. Treasury yields, which failed to get traction from a strong U.S. payrolls number on Friday. U.S. employers hired more workers than expected in November, driving the jobless rate to a five-year low of 7.0 percent. But the better-than-expected jobs number was not robust enough to lead markets to price in an immediate withdrawal of monetary stimulus by the Federal Reserve, pushing U.S. Treasury yields lower and dragging the dollar down. The dollar fell to a 1-1/2 month low against the low-yielding safe-haven Swiss franc, with the latter also buoyed by growing signs that deflation in Switzerland was abating and the economy was growing. The dollar fell to 0.8910 francs, its lowest since Oct. 25 on trading platform EBS. A Reuters poll showed Wall Street firms expect the Fed to start reducing its massive bond-buying programme no later than March, with only a handful of them expecting action as early as next week. Fed policymakers like Jeffrey Lacker, Richard Fisher and James Bullard will speak later, with traders keen to hear any hints on when tapering will begin. The only speaker who is a voter on the Federal Open Market Committee is Bullard, however. He recently said a strong payrolls number would raise the chance of tapering in December. Against the yen, the dollar held firm at 103.10 yen following Friday's 1.1 percent rally, not far from six-month peak of 103.38 hit on Tuesday. The yen continued to underperform on the Bank of Japan's ultra-loose monetary policy and the pick-up in risk appetite. Data on Monday showed Japan's current account balance unexpectedly fell into the red in October, underpinning the dollar against the yen. "If the ability of dollar/yen to hold above 103 yen is not a function of dollar strength, it must be related to yen weakness," said Jane Foley, senior currency strategist at Rabobank. "The recent poor current account report from Japan and weak wage data will have helped support this theme."