* U.S. dollar stays soft after Friday's weak jobs data
* Dollar bounces on U.S. ISM non-manufacturing data
* Kiwi dollar slides as bacteria found in NZ milk products
* Strong UK data lifts sterling; RBA decision awaited
By Julie Haviv
NEW YORK, Aug 5 (Reuters) - The dollar slid against the yen on Monday, remaining under pressure after Friday's jobs figures lowered expectations that the Federal Reserve would start reducing its bond purchases in the near term.
The greenback, however, found support from data showing an acceleration in the pace of growth in the U.S. services sector in July. New orders rose to their highest in five months, a report from the Institute for Supply Management showed.
The ISM data added to views that economic growth will strengthen in the latter half of the year, as last week's ISM manufacturing report showed the sector's growth hit a two-year high in July.
Paul Edelstein, director of financial economics at IHS Global Insight, in Lexington, Massachusetts, said it appears that the slow dissent toward stagnation that began in March, on both the manufacturing and non-manufacturing sides, is over.
"This is consistent with our view that GDP growth will continue to accelerate in the second half of the year, though remain subdued at around 2 percent," he said.
Whether the ISM non-manufacturing report prompts the Federal Reserve to begin slowing its $85 billion in monthly bond purchases next month is still an open question. While recent economic data has been mostly strong, the Fed unnerved some investors last week when it flagged low inflation and rising mortgage rates as potential growth risks.
Less stimulus could cause interest rates to rise and potentially make the dollar more attractive for investors.
In late morning New York trade, the dollar was down 0.4 percent at 98.58 yen, above the global session low of 98.27 yen but below the high of 99.15 yen.
Nevertheless, the dollar's appeal to investors was diminished by last Friday's jobs data that showed U.S. employers slowed their pace of hiring in July. The report could make the Fed more cautious about scaling back its bond-buying program.
The Fed's asset-purchase program, called quantitative easing, is negative for the dollar as it is tantamount to printing money.
The day's big mover was the New Zealand dollar, which tumbled to a one-year low against the U.S. dollar after New Zealand's major dairy exporter, Fonterra, said it had found bacteria in some of its products that could cause botulism.
China halted the import of some dairy products from New Zealand and Australia in response.
The New Zealand dollar was last down 0.6 percent at $0.7784 .
Dairy produce accounts for about a quarter of New Zealand's export earnings and any development that could hurt its exports typically causes the currency to fall.
"If this scandal worsens and if more countries put a ban on New Zealand's dairy imports ... then I would imagine the New Zealand dollar would weaken," said Jane Foley, senior currency strategist at Rabobank, adding that it could drop toward $0.70.
However, she said the currency would recover if the crisis was managed well by the New Zealand authorities.
The kiwi would come under additional pressure if the dollar, which fell after Friday's below-forecast U.S. jobs data, resumed its recent upward trend. The next key chart support for the New Zealand currency was at the June 1, 2012, low, $0.7456.
"There was an exuberance in the market relative to the significance of the milk scandal, but other factors may drive the New Zealand dollar lower in the medium term," said Hans Redeker, head of global FX strategy at Morgan Stanley.
He said New Zealand's substantial foreign liabilities - it had a current account deficit of 4.8 percent of GDP at the end of March - made it particularly vulnerable to declines in investor appetite for risk.
Morgan Stanley's Redeker said the dollar could extend falls towards 94 yen near term, but he expected it to recover after that, and remained "very upbeat" on U.S. economic prospects.
The Australian dollar was up 0.1 percent at $0.8904, following an earlier slide to a three-year low of $0.8848 after weak retail sales data bolstered expectations that Australia's central bank would cut interest rates on Tuesday.
The UK pound rose 0.2 percent to $1.5324, lifted by a very strong UK services-sector survey.
The euro slipped 0.3 percent to $1.3248, stuck below chart resistance around $1.33 and last week's peak of $1.3344.
Euro-zone business expanded for the first time in 18 months in July, albeit very slightly, data showed on Monday.
Retail sales in the euro zone, however, fell across the board for the first time in three months in June, highlighting the drag of depressed household spending on the bloc's fragile recovery.