FOREX -Aussie jumps on jobs data surprise; euro retreats

* Aussie up 0.9 pct after strong Australian jobs data

* Euro on retreat over Greece, fall in German yields

* Dollar index rises around 0.3 percent (Updates after start of European trade, changes dateline from previous SINGAPORE/SYDNEY)

By Patrick Graham

LONDON, April 16 (Reuters) - The Australian dollar was the biggest mover on major currency markets on Thursday, jumping almost 1 percent after strong domestic jobs data while the U.S. dollar edged higher against the euro after a volatile week.

The Aussie has had a rough 18 months, falling to almost six-year lows as the end of a boom in mining investment cast doubt on the country's growth prospects. It faces new headwinds from signs that China, the main market for much of its output, is also slowing significantly.

But employment sped past expectations in March while jobs created in February were revised up sharply, prompting markets to scale back bets for another cut in interest rates.

"Despite a slowing China and depressed iron ore prices the Aussie remains reluctant to head lower for now," said Angus Campbell, Senior Analyst at online brokerage Fx Pro in London.

He said the jobs numbers were the main driver but that the Aussie had also benefited from broader strength in commodities on the back of a jump in oil prices.

"A number of traders are becoming more bullish on oil now that it has broken to fresh highs for the year and risen as much as 35 percent since January and March lows."

In early deals in Europe, the Aussie was up 0.9 percent on the day at $0.7750, just off a peak of $0.7782 hit overnight

The euro has yo-yoed by up to 5 cents against the dollar this week, an expression of the doubts that have crept in to the U.S. currency's year-long rally and which many banks say will eventually take it past parity for the first time since 2002.

After a slack start in Europe, the dollar was up around 0.5 percent at $1.0634 per euro by 0813 GMT.

Dealers pointed to a resurgence of concerns over Greece as one negative for the single currency, but said that the bigger driver looked to be further falls in German government bond yields that make it less profitable to hold euros compared to other currencies like sterling and the dollar.

The pound hit a 4-week high against the euro.

"Funding in euros makes sense at the moment," said Josh O'Byrne, a strategist with Citigroup (NYSE: C - news) in London. "We may see squeezes every now and again, but the policy backdrop more broadly remains in favour of a weaker euro."

Led by the move against the euro, the dollar index rose 0.4 percent to 98.696, having set a one-week low of 97.897 earlier on Thursday. It was just over 0.1 percent higher at 119.305 yen. (Additional reporting by Ian Chua in Sydney and Masayuki Kitano in Singapore; editing by John Stonestreet)