* Euro jumps against yen to more than 3-year high
* Dollar gains further against yen after puncturing 100 level
* Kiwi, Aussie come back under pressure
By Sophie Knight and Lisa Twaronite
TOKYO, May 10 (Reuters) - The dollar extended its relentless rally against the Japanese currency on Friday to break above 101, its highest since April 2009, after shooting through the 100 mark in the previous session.
The dollar last bought 100.98 yen on the EBS trading platform, spurred on by signs of improvement in the U.S. labour market on Thursday and renewed debate by U.S. Federal Reserve officials about scaling back the central bank's asset purchases.
The yen's slide accelerated on Friday after Japanese government data showed domestic investors bought a net $5.2 billion of foreign bonds in the past two weeks, suggesting the Bank of Japan's aggressive easing may finally be pushing them to seek higher yields overseas.
"I think it's headed to 103 minimum. Now that the ceiling has been broken, there's no major resistance till 105. A 2 percent inflation target would be consistent with 104.5 to 105," said Kathy Lien, managing director at BK Asset Management in New York.
Analysts said the move was driven more by dollar strength than yen weakness, as well as expectations that the fundamentals will change.
"The yield spread between 10-year U.S. and Japanese bonds indicates an exchange rate of 88 yen would be reasonable, and some people argue that the yen's weakness is odd, given that the spread hasn't changed since January - but it's all about expectations," said Takako Masai, head of markets research at Shinsei Bank.
Masai added that market participants expect U.S. bond yields to rise, prompting Japanese investors to buy them, which would weaken the yen further.
The euro rose 0.4 percent against the yen to 131.71 after scaling as high as 131.91, its highest since January 2010.
The common currency steadied to $1.3041, after dropping 0.9 percent on EBS on Thursday as the greenback gained across the board. The dollar index jumped 1 percent to a two-week high of 82.824, but eased 0.1 percent on Friday to 82.725.
Data on Thursday showed U.S. claims for unemployment benefits fell to their lowest level since January 2008, suggesting the Fed is making progress in brightening the employment picture.
Some economists expect the central bank to reduce the $85 billion a month of bonds it now buys as unemployment approaches its 6.5 percent target. Fed officials debated the merits and timing of the central bank's bond buying program on Thursday.
The Antipodean currencies were weak after regaining lost ground in the previous session following stellar jobs reports. The Kiwi dollar fell 0.4 percent to $0.8373, just above its Thursday low of 0.8353, its lowest since March 27.
The Aussie slipped 0.1 percent to $1.0078, coming back under the pressure it has suffered since the Reserve Bank of Australia cut rates to a record low on Tuesday. The RBA will release a statement on monetary policy later on Friday.
A Reuters poll of 52 analysts published on Friday but taken before the Aussie's slump put the unit at $1.0300 in one month, before edging to parity by this time next year.
Australia's rate cut was part of an increasing trend for monetary easing, with the European Central Bank and South Korea also dropping rates in the past two weeks.
Some sources say this means Japan is unlikely to be singled out at this weekend's G7 meeting for attempting to weaken its currency through monetary easing.
"Today's movement was not a result of the BOJ's easing, so I think the yen is unlikely be hit by any comments at the moment," said Masai of Shinsei Bank.
"But as the dollar has now hit a new milestone, people will be on alert. Negative comments are unexpected and therefore could have an impact... although strengthening to 90 against the dollar no longer a possibility," she said.