FOREX-Dollar edges down from highs as investors take profits

* Euro takes back some lost ground after hitting 7-month low

* ECB deposit rate cut now seen as less likely

* Long-dollar positions rose even ahead of payrolls data -IMM

By Jemima Kelly

LONDON, Nov 9 (Reuters) - The dollar edged away from a 6-1/2-month high against the euro on Monday, as investors took profits on the greenback's surge after bumper U.S (Other OTC: UBGXF - news) . jobs data bolstered bets on the U.S. Federal Reserve raising interest rates in December.

The only major currency against which the dollar climbed further on Monday was the yen, which hit a 2-1/2-month low of 123.495, down 0.3 percent on the day.

The euro fell sharply on Friday to $1.07045, its weakest since mid-April (LSE: 0N69.L - news) . That took the single currency's falls to almost 6 percent in the two weeks since the European Central Bank indicated that it would expand its asset-purchase programme and could further cut its deposit rate.

But on Monday, the single currency recovered around a third of a percent to $1.0774.

Some analysts said the ECB's dovishness at its last meeting had been because of the euro's strength - and the fact that it had now fallen back made another deposit rate cut less likely, thereby providing support to the euro.

"The lower euro/dollar goes, the less need there is for the ECB to do more," said BNP Paribas (Xetra: 887771 - news) currency strategist Michael Sneyd in London.

Some investors also used the single currency's plunge to take profits on their dollar holdings, and others to buy euros on the dip.

"Demand for euro, in terms of real money, is still high," said Masashi Murata, currency strategist for Brown Brothers Harriman in Tokyo.

The U.S. nonfarm payroll report on Friday showed a rise of 271,000 last month, far exceeding the 180,000 new jobs for October economists polled by Reuters had predicted.

Following the report, 15 of 17 primary dealers, the banks that deal with the Federal Reserve directly, said they expect it to raise rates at its next meeting in December, according to a Reuters poll.

Even (Taiwan OTC: 6436.TWO - news) ahead of the robust jobs data, some investors had begun betting on a rate increase. Speculators bolstered bullish bets on the U.S. dollar in the week through Nov. 3, as net long-dollar positions climbed to their highest in more than two months, according to Reuters calculations and data from the Commodity Futures Trading Commission released on Friday.

The dollar index, which tracks the greenback against a basket of six major rival currencies, rose as high as 99.345 on Friday, its loftiest peak since mid-April. But the euro's rebound brought it down about 0.3 percent on Monday, to 98.958.

(Reporting By Jemima Kelly; Editing by Andrew Heavens)