* Dollar on track for winning week vs yen, euro
* Investors await US June jobs report later on Friday
* U.S. employers expected to have added 179,000 jobs in June
* ECB likely to move cautiously on stimulus reduction-minutes
By Lisa Twaronite
TOKYO, July 7 (Reuters) - The dollar gained in Asian trading on Friday, getting a leg up against the yen after the Bank of Japan increased its purchases of Japanese government bonds in a move aimed at stemming a rise in yields.
The dollar was on track for weekly gains, though investors were unlikely to push the upside significantly as they braced for monthly U.S. employment data later in the global session, following some downbeat jobs figures overnight.
The dollar extended gains against its Japanese counterpart after the BOJ's move, rising 0.6 percent to 113.830 yen after touching a session high of 113.835 yen, its highest level since May 12. It was up 1.3 percent for the week.
The BOJ offered to buy an unlimited amount of 10-year JGBs at yield of 0.110 percent and also increased its buying of five- to ten-year JGBs through an auction to 500 billion yen from 450 billion yen.
"The move shows the BOJ's determination to control JGB yields," said Ayako Sera, senior market economist at Sumitomo Mitsui Trust in Tokyo, after the 10-year yield rose to a five-month high of 0.105 percent in the morning.
"The timing was not a surprise, because there are no operations scheduled on Monday, and if U.S. employment data surprises on the upside, today was the BOJ's only chance to take pre-emptive action against rising JGB yields," she said.
The dollar index, which tracks the greenback against a basket of six major rivals, was 0.2 percent higher on the day at 95.947, up 0.3 percent for the week.
Investors awaited the Labor Department's June nonfarm payrolls report. Economists polled by Reuters expect U.S. employers to have added 179,000 jobs last month, above May's relatively small gain of 138,000.
Ahead of Friday's jobs data, the ADP National Employment Report showed private-sector payrolls increased by 158,000 jobs last month, coming in below the 230,000 jobs created in May and below economists' expectations for a rise of 185,000.
Separate figures from the Labor Department showed initial claims for state unemployment benefits increased 4,000 to a seasonally-adjusted 248,000 in the week ended July 1, marking the third straight weekly increase in claims.
The U.S. services sector index, released by the Institute for Supply Management on Thursday, rose to 57.4 in June, compared with a forecast of 56.5. The employment index, however, fell to 55.8, compared with 57.8 in May, suggesting the labour market could be cooling.
The dollar was bolstered by higher U.S. Treasury yields which rose even after the uninspiring data, amid concerns that the U.S. Federal Reserve will begin unwinding its bond holdings sometime this year.
The benchmark U.S. 10-year yield touched a nearly eight-week high of 2.391 percent on Thursday. It last stood at 2.389 percent in Asian trading, above its U.S. close of 2.369 percent.
Minutes from the Fed's June meeting released on Wednesday showed that some policymakers wanted to announce the beginning of the central bank's reduction of its massive debt portfolio by the end of August, but others wanted to wait until later in the year.
The euro edged down 0.1 percent on the day to $1.1412 , and was down 0.1 percent for the week.
European Central Bank policymakers are open to a further step towards reducing their monetary stimulus but are likely to move slowly out of fear of causing market turmoil, minutes of their last meeting showed on Thursday.
Faster economic recovery in the euro zone is giving the ECB room to pare its extraordinary stimulus measures, Bundesbank President Jens Weidmann said on Thursday. (Reporting by Tokyo markets team; Editing by Sam Holmes)