* Dollar steadies after dropping 1 pct vs yen on Friday
* Payrolls miss forecast, but U.S. jobless rate lowest since 2008
* Speculators cut U.S. dollar longs to lowest in over a year -CFTC
By Lisa Twaronite
TOKYO, Sept 7 (Reuters) - The dollar nursed its losses on Monday, after dropping on mixed U.S. employment data that failed to bring much clarity as to the timing of the U.S. Federal Reserve's long-awaited interest rate hike.
Nonfarm payrolls rose a less-than-expected 173,000 last month, a slowdown from July's upwardly revised gain of 245,000 and the smallest rise in five months. But the unemployment rate dropped to a near 7-1/2-year low and wages accelerated. ID:nL1N11925M
"The problem is that these numbers are probably consistent with 2 to 2.5 percent GDP growth at best, good enough to begin the normalization of U.S. rates but not good enough to serve as a locomotive for the rest of the world," Steven Englander, global head of foreign exchange strategy at Citi, said in a note to clients.
The figures came against a backdrop of anxiety about falling global equities and China's slowing economy, which have led investors to pare back bets that the Fed would raise interest rates as early as at its meeting this month.
Trading activity was likely to be thinner than usual on Monday, with U.S. markets closed for the Labor Day holiday.
The dollar added about 0.1 percent against the yen JPY= to 119.18, moving away from its session low of 118.60 on Friday, when it sank 1 percent.
The euro gained about 0.1 percent to $1.1149 EUR= . The European common currency has benefited as investors unwound euro-funded carry trades, in which they borrowed euros to invest in high-yielding currencies.
Data from the Commodity Futures Trading Commission released on Friday and Reuters calculations showed that speculators further cut back bullish bets on the U.S. dollar in the week ended Sept. 1 for the second straight week, to their lowest level since July last year. IMM/FX
The dollar skidded to a seven-month low of 116.15 yen on Aug. 24, while the euro rose as high as $1.1715, as China-driven panic gripped markets around the world.
The European Central Bank warned last week that growth would suffer from fading momentum in emerging markets, particularly China, and falling oil prices could drag the 19-member euro zone back into deflation in coming months. ID:nL5N1190VG
After the ECB left rates unchanged as widely expected, ECB President Mario Draghi explicitly said for the first time that the bank's bond-buying programme may run beyond its end-date of September 2016, and that its size and composition might be adjusted.
The dollar index .DXY , which measures the greenback against a basket of rival currencies, was nearly flat from Friday's late U.S. levels at 96.209, and well ahead of last month's seven-month low of 92.621.