* Dollar boosted by upbeat US private sector jobs report
* Accompanying rise by US yields seen necessary for more USD gains
* Non-farm payrolls awaited for potential extra lift
* Aussie posts modest bounce, still near 4-week low (Updates prices, adds details and quotes)
By Shinichi Saoshiro
TOKYO, June 2 (Reuters) - The dollar hit a one-week high against the yen on Friday after upbeat U.S. private sector job figures, while the closely-watched non-farm payrolls report out later in the global day could provide another boost.
The dollar hit 111.680 yen, its highest since May 26, in early trade before slipping back to 111.580, to hold a 0.2 percent gain on the day. For the week, it was on track to gain about 0.25 percent.
The dollar also received an additional lift as an improvement in broader risk sentiment - Japan’s Nikkei reached a 22-month peak after Wall Street set record highs - curbed demand for the safe-haven yen.
“Dollar/yen has climbed on the stronger-than-expected advance by Japanese stocks today,” said Masashi Murata, senior strategist at Brown Brothers Harriman in Tokyo.
“The dollar still needs a meaningful rise by U.S. yields if it is to gain further, and right now Treasuries appear to be bound by thoughts that the Federal Reserve will limit its monetary tightening after it hikes rates in June.”
The benchmark 10-year Treasury yield was marginally higher at 2.22 percent, but was still a long way from this year’s high above 2.60 percent seen in March.
The euro was little changed at $1.1217 after losing 0.3 percent the previous day. The common currency had risen to a nine-day high of $1.1257 on Thursday and was still poised for a 0.4 percent weekly gain.
Prior to the boost from the stronger-than-expected May ADP employment report issued late on Thursday, the dollar had struggled with U.S. political concerns and a consequent risk-off mood that had gripped the wider markets earlier in the week.
The currency now awaits the May U.S. non-farm payrolls report to end the week on a high.
“That today’s U.S. jobs report is going to be strong appears to have become the consensus, so it has become difficult for participants to sell the dollar,” said Yukio Ishizuki, senior currency strategist at Daiwa Securities.
“If the jobs report really is strong, we could see the dollar make significant headway as that could prompt speculators to unwind positions that involved buying the yen and selling Treasuries.”
A Reuters poll showed economists forecasting that the United States added 185,000 jobs in May.
A stronger-than-forecast jobs report could resuscitate expectations for the Fed to keep raising interest rates beyond June, after a recent series of downbeat indicators had thwarted that scenario.
The dollar index against a basket of major currencies was steady at 97.197 after adding 0.3 percent overnight. The index was headed for a 0.25 percent loss for the week.
The Australian dollar was 0.2 percent higher at $0.7388 , taking back some ground following its sharp slide on Thursday.
The Aussie had shed 0.75 percent on Thursday to plumb a four-week low of $0.7372 after news of an unexpected drop in China’s manufacturing activity.
The New Zealand dollar was 0.1 percent higher at $0.7072 after it was also hit by the lacklustre Chinese numbers. (Reporting by Shinichi Saoshiro; Editing by Simon Cameron-Moore)