FOREX-Dollar rally stalls, slips back from 11-1/2-year high vs euro

(Adds comment, late New York prices)

* Dollar briefly touches 11-1/2-year high against euro

* Yen weakens against dollar and euro

* Dollar retreats after hitting fresh three-month peak against yen

* Strong U.S. jobs data raises confidence Fed poised to hike rates

By Daniel Bases

NEW YORK, March 9 (Reuters) - The dollar fell from an 11-1/2-year high versus the euro on Monday as investors took profits from gains made after last week's strong U.S. employment report helped cement expectations the Federal Reserve will raise U.S. interest rates this year.

"We seem to be taking a breather here, consolidating gains made off the nice jobs report. It is going to take something else to get us back down below the $1.0760 range, but we're not too sure what that immediate catalyst will be, given the economic calendar is light this week," said John Doyle, director of markets at Washington, D.C.-based Tempus Inc.

The euro held at $1.08540, up 0.07 percent, according to the EBS trading platform. It earlier fell to $1.0822 in Asian trade, marking the euro's weakest point since September 2003. The $1.07620 level is the next significant area of support.

The gap (NYSE: GPS - news) between U.S. Treasury yields and the euro zone widened, making U.S. investments more attractive for investors hunting for higher-performing and safe returns. While not universally accepted, markets anticipate a raise increase sometime mid-year given the robust U.S. data.

However, subdued inflation and lack of wage growth counterbalance the higher rates argument. The risk is a too-soon increase in rates could stifle economic growth.

The euro is expected to remain under pressure against the greenback as the European Central Bank started its 1 trillion-euro bond-buying programme on Monday.

Greece's financial reforms are in focus. Dutch Finance Minister Jeroen Dijsselbloem, president of the Eurogroup of finance ministers, said Athens must start discussions for completing its bailout program and implementing reforms.

The dollar's one positive spot comes against the Japanese currency, trading at 121.22 yen, up 0.31 percent and just off a fresh three-month high of 121.415.

The greenback fell 0.21 percent to C$1.2593, or 79.41 U.S. cents, even after data showed Canadian housing starts plunged to their weakest since 2009 in February.

"Canadian data this morning was terrible but it didn't seem to do too much damage. Clearly, after such a big rally last week, the U.S. dollar is just retracing a bit," said Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets in New York, adding:

"The market took the weekend to realize it was a great payrolls number but that doesn't mean the Fed is going to tighten in June and remove 'patience' from the statement in March." (Additional reporting by Ahmed Aboulenein and Anirban Nag in London.; Editing by Larry King and James Dalgleish)