* Euro heads for best one-day rise in a month * U.S. economy adds 163,000 jobs last month, topping forecasts * Market players reassess ECB stance on bond-buying By Wanfeng Zhou NEW YORK, Aug 3 (Reuters) - The dollar and yen tumbled on Friday after a report showing the U.S. economy added the most jobs in five months in July dampened demand for traditional safe-haven currencies. The euro headed for its best one-day rise in a month against the dollar. Its rally began before the jobs data as investors took a more optimistic view of Thursday's European Central Bank meeting, which signalled further support for debt-stricken Spain and Italy. The U.S. Labor Department reported employers added 163,000 jobs in July, beating expectations for a 100,000 gain. The surprisingly strong increase also lifted higher-yielding, commodity-linked currencies, with the Canadian dollar breaking parity against the U.S. currency for the first time in more than two months. "The dollar and yen are losing ground across the board this morning on an unexpected rebound in risk appetite going into the weekend," said Michael Woolfolk, senior currency strategist at BNY Mellon in New York. Analysts said the data could dampen expectations for a third round of quantitative easing by the Federal Reserve, which some had hoped would come as early as next month, but an increase in the jobless rate to 8.3 percent in July will probably keep expectations of additional monetary stimulus intact. "Overall, the greater-than-expected increase in payrolls should win the day and act as some support to risk assets even if it does diminish the chances of QE3 as early as September," said Andrew Grantham, economist at CIBC World Markets in Toronto. The dollar index, which tracks the greenback versus six other major currencies, fell 1.2 percent to 82.324, on pace for its biggest daily drop since the end of June. The dollar gained 0.5 percent against the yen, to 78.58 yen , after hitting a two-week high of 78.77. The Japanese currency fell sharply across the board, losing more than 1 percent against the Australian, Canadian and New Zealand dollars. It lost more than 2 percent versus the Mexican peso and fell 2.6 percent against the South African rand. REASSESS ECB The euro rose as high as $1.2386 on Reuters data and was last up 1.7 percent at $1.2385, on track for its best day since the end of June. Against the yen it rallied 2.1 percent, to 97.40 yen. "Markets are looking through the ECB disappointment yesterday and realizing that further supportive measures for Spain, Italy, etc. are still likely over the medium term," said Greg Anderson, North America head of FX strategy at Citigroup in New York. The ECB said on Thursday it will draw up plans in the coming weeks to make outright purchases to stabilize euro zone borrowing costs, disappointing hopes for quick action to address the debt crisis. It indicated any intervention would not come before September, and bank President Mario Draghi also said intervention would come only if governments activated the euro zone's bail-out funds to join the ECB in buying bonds. Recent highs around $1.2390/.2406 were expected to be strong resistance for the euro with speculators and long-term investors, such as reserve managers looking to sell the euro on any bounce, traders said. Ten-year Spanish government bond yields fell, but were still not far from the 7 percent danger level. Italian 10-year bond yields also slid. "Compared to expectations two weeks ago, the ECB has delivered something more," Jens Nordvig, global head of currency strategy at Nomura Securities in New York, wrote to clients. "This does not mean that the euro crisis is over, but it does improve the risk distribution for certain euro zone assets and global risk assets more generally."

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