* Robust employment report underscores U.S. economic strength
* Traders eye Fed's Powell's speech (Updates rates, comments to U.S. market open; changes dateline, previous LONDON)
By Saqib Iqbal Ahmed
NEW YORK, Jan 4 (Reuters) - The U.S. dollar rose against the yen and the euro on Friday after data showed U.S. job growth surged in December, which could help allay recent worries about the health of the economy that have roiled financial markets.
The dollar was 0.72 percent higher against the Japanese yen and the euro fell 0.34 percent against the greenback.
The upbeat Labor Department employment report contrasted starkly with reports this week showing Chinese factory activity contracting for the first time in 19 months in December and weak manufacturing across much of Europe and Asia.
The report likely keeps the Federal Reserve on course to continue raising interest rate this year, deepening its rift with Wall Street and U.S. President Donald Trump, who has chastised the Fed and its chairman, Jerome Powell, repeatedly for the rate increases.
Investors will now turn their attention to a scheduled speech from Powell later on Friday.
"It is a dollar-friendly number and will go some way in allying concerns about a slowing U.S. economy," Joe Manimbo, senior market analyst at Western Union Business Solutions, in Washington.
"The blockbuster jobs report will certainly validate the Fed's hawkish stance," he said.
The dollar, which had slipped against the safe-haven Japanese yen in recent days amid growing worries about a slowdown in global growth, found support earlier in the session after China announced new measures to support its economy and hopes grew that upcoming U.S.-China trade talks would make some progress.
"Today's number will provide dollar bulls with some welcome optimism and bolster the case for further tightening from the Fed through 2019," Sam Cooper, vice president of market risk solutions at Silicon Valley Bank, said in a note.
Market sentiment improved when China confirmed that trade talks with the United States would be held in Beijing on Jan. 7-8. Trade tensions between the world's two largest economies rattled financial markets for most of 2018.
China's central bank slashed the amount of cash that banks must hold as reserves for the fifth time in the past year, the latest effort to free up new lending and reduce the risk of a sharp economic slowdown.
On Friday, currencies such as the Australian dollar recovered after being hit hard in Thursday's scramble for safety. The Aussie gained 0.49 percent.
The euro weakened after a survey showed that euro zone business activity fell to a four-year low in late 2018 and official data showed that inflation in December had slowed by more than expected.
With some calm settling into markets, most emerging-market currencies rebounded. The South African rand and the Turkish lira each gained about 1 percent against the greenback.
The Canadian dollar logged its third consecutive day of gains after touching an almost 20-month low earlier in the week.
Sterling was little changed on Friday after suffering heavy losses spurred by fears of a global economic slowdown. (Reporting by Saqib Iqbal Ahmed Editing by Frances Kerry)