* Dollar/yen hits highest level since August 2009
* Euro falls to three-month low against the dollar
* U.S. jobs data well above expectations
NEW YORK, March 8 (Reuters) - The dollar rallied to a fresh 3-1/2-year high against the yen and a three-month high against the euro on Friday, buoyed by a report showing U.S. employers stepped up hiring in February, pushing the unemployment rate to a four-year low.
The report, suggesting the economy has developed enough momentum to withstand the blow from higher taxes and deep government spending cuts, fueled speculation that the U.S. Federal Reserve will tone down its ultra-loose monetary policy sooner than anticipated. .
Non-farm payrolls surged in February, with employers adding 236,000 jobs, the U.S. Labor Department said on Friday. That reading handily beat economists' expectations for a gain of 160,000 jobs. The jobless rate fell in February to 7.7 percent - the lowest since December 2008 - from 7.9 percent in January.
The euro fell against the dollar, erasing gains from Thursday when European Central Bank (ECB) President Mario Draghi gave less dovish policy signals than expected.
"The prospect that this data, at the very margin, brings forward (the) prospective end of QE will turn this into a broader U.S. dollar-positive event," said Alan Ruskin, head of G10 FX strategy at Deutsche Bank in New York.
Against the yen, the dollar climbed as high as 96.54 yen , the highest level since August 2009. It was last at 96.14 yen, up 1.4 percent, its biggest one-day gain since Feb. 11.
Some US$3.7 billion in yen changed hands, using Reuters Dealing.
The yen seems likely to remain under pressure as investors, looking past the Bank of Japan's (BOJ) decision to hold policy steady on Thursday at its April meeting, expect new officials to take aggressive action to beat deflation.
If the BOJ expands its stimulus program next month, that could open the way for a test of 100 yen, said Ronald Ip, director of wealth solutions group for HSBC Global Markets, in London.
Traders reported a four-week dollar/yen put transaction in the options market, giving the buyer the right to sell the dollar at 100 yen in four weeks' time.
Geoffrey Yu, currency strategist at UBS In London, said any pullback in the dollar, especially against the yen, could be a good buying opportunity.
The euro rose 0.5 percent against the yen to 124.83 yen , with the session peak at 125.95 yen, the highest level since Feb. 13.
It fell against the dollar on Friday, a day after the ECB president gave no indication that he would cut interest rates further in the euro zone. The euro was last down 0.9 percent at $1.2985 with the session low of $1.2955, the lowest since Dec. 11, using Reuters data.
Some US$2.8 billion in euros changed hands, using Reuters Dealing.
Investors' expectations of future rate cuts, however, remained a focal point, reinforced by comments from International Monetary Fund head Christine Lagarde, who said the ECB should lower rates.
Morgan Stanley analysts said in a note to clients that the downward revision of euro-zone growth forecasts and the below-target inflation forecast continued to provide the ECB with flexibility for future action on interest rates.
They said any rebound in the euro against the dollar was an opportunity to sell for an eventual decline toward $1.27/1.28.