* Dollar index little changed at 77.868 <.DXY>
* Dollar helped on regulators' warning banks on rate risks
* Japan finmin tones down but weak yen bias seen intact
* U.S. Dec non-farm payrolls seen unchanged from prvs month
(Adds data, updates prices)
By Tamawa Desai
LONDON, Jan 8 (Reuters) - The dollar was well-supported on Friday on expectations for an upbeat U.S. payroll figure which would point to an improving economy and possibly hasten U.S. interest rate tightening speculation.
The greenback also received help from U.S. regulators urging banks to protect themselves against hikes in interest rates [ID:nN07206622], and as Kansas City Federal Reserve Bank President Thomas Hoenig said the Fed should act sooner rather than later to contain inflation pressures. [ID:nN07200067]
"The expectation is for the dollar to continue strengthening on the back of payrolls," said Lee Hardman, currency economist at Bank of Tokyo-Mitsubishi UFJ. "The dollar could see some setback on a weaker reading, but that would just be a good opportunity to buy dollars."
The median of forecasts in a Reuters poll of 84 economists called for non-farm payrolls to remain unchanged from the previous month. The median in a Reuters poll conducted last week was for U.S. employers to have cut 8,000 jobs in December.
Estimates ranged from 80,000 jobs lost last month to a gain of 100,000 jobs. The Labor Department will release the non-farm payrolls data on Friday at 1330 GMT. [ID:nN07192946]
A positive reading would be the first in more than two years since the U.S. economy entered recession.
U.S. President Barack Obama is set to make a statement on the economy at 1940 GMT.
Currency markets were in a holding pattern ahead of the U.S. jobs report. The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was little changed on the day at 77.906 <.DXY>.
By 1017 GMT, the euro was flat from late U.S. trade at $1.4317 <EUR=>. Reaction was limited to data showing the euro zone economy shrank a revised -4.0 percent on year from a previous estimate of -4.1 percent [ID:nBRQ009663].
Separate data showed euro zone unemployment hitting 10.0 percent in November. [ID:nBRQ009662]
WEAK YEN BIAS UNCHANGED
The dollar edged down from 4-month highs against the yen after Japanese Finance Minister Naoto Kan said on Friday that markets should decide currency levels, toning down his earlier call for a weaker yen after an apparent rebuke by Prime Minister Yukio Hatoyama. [ID:nTOE60701F]
The dollar fell 0.2 percent from late U.S. trade to 93.12 yen <JPY=> after rising as high as 93.78 yen on trading platform EBS, its strongest level since late August.
At his first news conference as finance minister, Kan said on Thursday many Japanese firms were in favour of dollar/yen around 95 yen, higher than the pair traded in late 2009.
Many market players still see Kan favouring a weaker yen in contrast to his predecessor Hirohisa Fujii, who was perceived as more tolerant of a stronger Japanese currency.
"There is no change to the present finance minister's bias for a weaker yen," said Masafumi Yamamoto, chief foreign exchange strategist in Japan for Barclays Capital. "The chances of intervention in cases where the yen truly rises has increased considerably compared to when Fujii was finance minister."
The euro dipped 0.2 percent to 133.32 yen <EURJPY=R>, having hit a one-month high at 134.12 yen in early Asian trade. (Editing by Mike Peacock and Toby Chopra)