FOREX-Bullish dollar hovers near multi-year highs vs yen, euro

* Dollar hovers in reach of 8-year high vs yen

* Euro struggles near 12-year low vs dollar, earlier spike fizzles

* Aussie on defensive, China inflation data eyed

By Shinichi Saoshiro

TOKYO, March 10 (Reuters) - The dollar hovered near multi-year highs against the yen and euro on Tuesday, initially flagging on profit taking but quickly finding its footing again as the underlying theme of monetary policy divergence held sway.

The dollar received a firm boost late last week as a strong U.S. jobs report helped cement expectations the Federal Reserve will hike interest rates as early as summer.

The European Central Bank and Bank of Japan, in contrast, remain deeply committed to monetary easing with the former having just started its 1 trillion euro bond buying programme on Monday.

The dollar rose as high as 121.625 yen after bouncing from an overnight low of 120.615. A move above 121.86 would take the greenback to its highest since July 2007.

"The momentum is there for dollar/yen to breach 121.86. There are no immediate factors per se that are supporting the dollar, but a lot of speculative bids from short-term players are likely to support the currency until next week's FOMC (Federal Open Market Committee), when the Fed could drop the word 'patient'," said Kyosuke Suzuki, director of forex at Societe Generale in Tokyo.

Any move to exclude "patient" from the Fed's statement after its March 17-18 policy meeting in the wake of strong employment would be seen as paving the way for an early rate hike.

Amid such expectations an overnight drop in U.S. Treasury yields, usually a negative factor for the dollar, failed to douse the greenback's strength.

The euro was within sight of a 12-year low of $1.0822 after an overnight spike to 1.0906 fizzled out.

The common currency was also weighed down by continuing uncertainty over Greece's debt situation.

Finance experts from Greece will open talks about economic reforms on Wednesday with officials from the European Union, the ECB and the International Monetary Fund.

Pushed down by the U.S. currency's broad strength, the Australian dollar was down 0.3 percent at $0.7679 after stooping to a one-month low of $0.7671.

Focus was on Chinese inflation data due later in the session, with the Aussie often traded as a proxy to China's economic performance. (Editing by Richard Pullin)