* Dollar/yen pokes above 110 threshold, first since 2008
* Mixed U.S. economic data does not dim dollar outlook
* Markets take profits on dollar longs (Updates prices, adds comment)
By Gertrude Chavez-Dreyfuss
NEW YORK, Oct 1 (Reuters) - The dollar dropped from six-year highs against the yen on Wednesday, weighed down by a fall in U.S. Treasury debt yields amid weakness in global stocks.
Investors also booked profits on long U.S. dollar positions ahead of key event risks such as the European Central Bank's monetary policy meeting on Thursday and Friday's U.S. nonfarm payrolls report.
Still, the dollar is expected to sustain its strength for the rest of the year as investors bet that robust U.S. economic data will lead the Federal Reserve to tighten monetary policy.
U.S. economic reports on Wednesday were mixed. A private sector employment report showed the U.S. economy added more than 200,000 jobs last month but that was offset by weaker-than-expected U.S. manufacturing data.
The Institute for Supply Management said its index of national factory activity dropped to 56.6 last month, its lowest since June, from 59.0 in August. Economists had forecast it would slide to 58.5. A gauge of new orders fell to 60.0 from 66.7.
"The dollar's moves today are positioning-driven because the selling in the dollar came after the positive jobs number," said Greg Moore, senior currency strategist, at RBC Capital Markets in Toronto.
"There's no reason for the market to sell the dollar like that unless it's positioning ahead of the U.S. nonfarm payrolls number."
In late New York trading, the dollar was down 0.3 percent at 109.23 yen, having risen past 110 yen during Asian trade.
The dollar index was flat at 85.949. The index has risen 7.4 percent so far this year, and is on track for its biggest yearly gain in nine years.
The greenback's weakness coincided with the fall in U.S. Treasury yields. Both U.S. 10-year note and 30-year bond yields fell to one-month lows.
"Obviously, there has been some profit-taking on long dollar positions," said Vassili Serebriakov, currency strategist at BNP Paribas in New York. "Beyond that, I don't think anybody has changed their mind on the bullish dollar trend."
The euro, meanwhile, was down 0.2 percent at $1.2611, holding near two-year lows hit on Tuesday. The euro zone's common currency was hit by fresh evidence of a slowdown in inflation in the area.
Data showed euro zone annual inflation cooled to 0.3 percent in September from 0.4 percent, intensifying the case for the ECB to offer more stimulus, including quantitative easing.
That stoked the view that monetary policies in Europe and the United States are diverging. While the Fed is expected to tighten at some point, there is a growing view that the ECB will need to implement a full-blown policy of government bond-buying to fend off the threat of deflation. (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Anirban Nag in London; Editing by Meredith Mazzilli and James Dalgleish)