* Dollar buoyed by Friday’s payrolls report * Investors bring forward bets for Fed tapering * Yuan steadies but focus on Asia’s rising COVID cases * Graphic: World FX rates tmsnrt.rs/2RBWI5E LONDON, Aug 9 (Reuters) - The dollar hit a four-month high against the euro on Monday, reversing a recent fall after strong labour market data encouraged investors to bring forward their bets on the Federal Reserve reducing its pandemic-era stimulus. The greenback strengthened as far as $1.1742 to the single currency, extending a 0.6% pop from Friday, when a strong U.S. jobs report stoked bets that a reduction in asset purchases could start this year and higher interest rates could follow as soon as 2022. It later settled at $1.1761. Against a basket of currencies, the dollar was down 0.1% on the day as European trading got underway but remained close to four-month highs. The dollar also climbed as high as 110.37 yen, following a 0.4% rally at the end of last week. Following the jobs report, the benchmark 10-year Treasury yield jumped 8 basis points on Friday to a two-week high of 1.3053%. “A strong U.S. employment report on Friday triggered a jump in U.S. bond yields, supporting the U.S. dollar higher,” said Alvin Tan, currencies strategist at RBC Capital Markets. The two previous months’ payrolls growth were also revised higher, and Tan noted that Fed Chair Jerome Powell had signalled jobs growth as the key indicator for the central bank’s evaluation of the economy’s progress. Fed officials have made a jobs market recovery a condition of tighter monetary policy. Friday’s non-farm payroll report showed jobs increased by 943,000 in July compared with the 870,000 forecast by economists in a Reuters poll. Numbers for May and June were also revised up. “The strong U.S. report appears to clear the last hurdle for the Fed’s tapering,” Mizuho Bank strategist Ken Cheung wrote in a research note. Cheung said market participants had pushed forward the Fed’s tapering announcement to as early as the Jackson Hole symposium in late August. There were signs of the dollar spike fizzling and markets were generally quiet, with investors warily eyeing a rise in COVID-19 cases across Asia. The dollar was little changed versus the offshore Chinese yuan after rallying on Friday. Sterling was flat at $1.3880 after earlier falling to $1.3856 as the dollar rallied across the board. Additional reporting by Kevin Buckland in Tokyo Editing by David Holmes Our Standards: The Thomson Reuters Trust Principles.