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* Fed's Yellen seen as more balanced in her Jackson Hole speech
* Dollar rises to 4-1/2-month high vs yen; euro hits 11-month low
* ECB's Draghi also due to speak at Jackson Hole gathering (Recasts, adds Yellen speech, analyst comments, changes byline, dateline; previous LONDON)
By Gertrude Chavez-Dreyfuss
NEW YORK, Aug 22 (Reuters) - The dollar gained on Friday after Federal Reserve Chair Janet Yellen came out more balanced than expected on her views about the U.S. economy in a speech to central bankers.
The speech by Yellen, a known policy 'dove', to an annual gathering of central bankers in Jackson Hole, Wyoming, cited persistent labor market slack but noted faster recovery in the sector could accelerate the timing of a Fed interest rate hike.
The greenback climbed to an 11-month high against the euro and a more than four-month peak above 104 yen versus the Japanese currency following Yellen's speech.
Yellen acknowledged the slack in the U.S. jobs market as she called for a "pragmatic" approach to monetary policy that allows officials room to evaluate data without committing to a pre-determined rate path.
At the same time, she said the labor market may in fact be tighter than it seems and the Fed may have to raise rates sooner and faster than expected.
Higher interest rates tend to boost the allure of the dollar as they raise the yield on some U.S. assets.
"On balance, the speech was a very gradual and nuanced move away from Yellen's overtly dovish policy stance in the past toward a more balanced view on the economy and on monetary policy," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.
The dollar rose as high as 104.18 yen, its highest since early April, and was last up 0.2 percent at 104.10 yen.
The euro, meanwhile, plunged to $1.3229 against the dollar, its lowest since September 2013. It last traded at $1.3230, down 0.4 percent.
For Joe Manimbo, senior market analyst at Western Union Business Solutions, Yellen seemed less concerned about low wage growth.
"Low wages are seen as an obstacle to an early Fed rate hike so any less concern on that front would be supportive of the rate debate," Manimbo said. "The fact that the event risk of the Fed chair's speech has come and gone has also allowed the dollar to resume its upturn."
With Yellen's speech out of the way, investors are focused on what European Central Bank President Mario Draghi will say at Jackson Hole later in the session. His speech will be scrutinized for any clues that euro zone policymakers are moving closer toward outright asset purchases, a scenario that would likely keep the euro under pressure. (Additional reporting by Anirban Nag in London; Editing by James Dalgleish)