FOREX-U.S. jobs report sends dollar soaring against major currencies

* Dollar at six-month high against euro

* U.S (Other OTC: UBGXF - news) . economy creates 271,000 jobs

* CME FedWatch sees 70 pct chance of Fed hike in December (Adds quotes, Fed comments)

By Gertrude Chavez-Dreyfuss and Dion Rabouin

NEW YORK, Nov 6 (Reuters) - The dollar jumped against major world currencies on Friday after data showed the U.S. economy created far more jobs than expected in October, bolstering the case for an interest rate increase from the Federal Reserve next month.

Non-farm payrolls increased 271,000 last month, the largest rise since December. Market economists polled by Reuters had predicted 180,000 new jobs for October.

The data sent the dollar higher across the board. The greenback hit highs of 2-1/2-months versus the yen, seven months against the Swiss franc and 6-1/2 months against the euro.

"I think (the dollar increase) will be sustained and will continue in the coming week," said Kathy Lein, managing director of FX strategy at BK Asset Management in New York. "I don't think we'll get too much additional push but maybe a slow ascent higher."

Recent speeches from Fed officials, including Chair Janet Yellen, had given traders the impression that the bar for a rate hike at its December meeting was low. Before the report, economists had said monthly job gains above 150,000 in October and November would be sufficient grounds for the first increase in overnight borrowing costs since 2006.

"This is an unambiguously strong report," said Brendan Murphy, senior portfolio manager for the Standish Global Fixed Income Fund in Boston. "It (Other OTC: ITGL - news) gives the Fed a green light to raise rates in December."

St. Louis Fed President James Bullard added to that perception on Friday, telling reporters after the data was released that the "case continues to be compelling" for a December rate increase. Bullard also said he expected inflation to reach around 2 percent by the end of next year, fulfilling the other part of the Fed's dual mandate.

Interest rate futures are now pricing a 72 percent chance that the U.S. central bank will raise borrowing costs next month, according to the CME Group (Kuala Lumpur: 7018.KL - news) 's FedWatch. Barclays (LSE: BARC.L - news) , TD Bank and BNP (Paris: FR0000131104 - news) all changed their outlooks, predicting a rate hike in December rather than March.

The euro fell to $1.0708, its lowest since April (LSE: 0N69.L - news) , and last traded down 1.3 percent at $1.0741.

The dollar climbed to 1.0068 Swiss francs, its strongest since mid-March. It was last up about 1 percent at 1.0060 francs.

Against the yen, the dollar rose to 123.26 yen, its highest since Aug. 21, and last traded at 123.20, up 1.2 percent.

Friday's gains put the dollar up 2.14 percent against the yen for the week, on track for its largest weekly gain against the Japanese currency since December. (Reporting by Gertrude Chavez-Dreyfuss and Dion Raboiun; Editing by Lisa Von Ahn)