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FOREX-Carry trades in focus after BOJ reiterates policy stimulus

* Nonfarm payrolls report shows bigger-than-expected job increase

* BOJ's special JGB purchase operations pressure yen

* Dollar-long positions pared ahead of jobs data - IMM

LONDON, July 10 (Reuters) - The Japanese yen weakened against its main rivals on Monday, lurking below a four-month high against the dollar, as investors looked to add bets playing into the divergence between rising Western government bond yields and a dovish Bank of Japan.

Bank of Japan Governor Haruhiko Kuroda on Monday reiterated the central bank's resolve to maintain its massive stimulus programme until inflation is stably above its 2 percent target.

"Carry trades are back in vogue and that can be seen in the yen's price action this morning but we should see some consolidation before Yellen's testimony this week," said Sue Trinh, head of Asia FX strategy at Royal Bank of Canada in Hong Kong.

Against the dollar the yen was trading at a two-month high at 114.28 after Friday's robust payrolls data.

U.S. job growth surged more than expected in June and employers increased hours for workers, signs of labor market strength that could keep the Federal Reserve on course for a third interest rate hike this year despite sluggish wage gains.

Bond yields have also diverged in recent weeks, helping carry trade punters, with the spread between 10-year U.S. Treasury yields and its Japanese counterpart at its widest in two months, thanks to rising U.S. yields.

On Friday, the BOJ sought to keep Japanese government bond yields near its policy target, embarking on a special market operation as well as increasing the size of its regular JGB purchase operations.

With latest data showing net long positions on the U.S. dollar at its lowest since mid-May 2016 after a run of lacklustre economic figures, the dollar may have some more room to against the yen as some investors cover back positions.

Against the euro, the yen was trading at 130.33 its highest level since Feb. 8, 2016. (Additional reporting by Lisa Twaronite in TOKYO, Editing by Angus MacSwan)