* Euro hurt by ECB head’s comments on price stability

* Dollar index hits highest since March 2006

* Dollar hits parity with Swiss franc

* Sterling drops after UK manufacturing data miss (Updates prices, adds comments, changes byline, dateline, previous LONDON)

By Sam Forgione

NEW YORK, Jan 2 (Reuters) – The U.S. dollar hit its highest level against the euro in 4-1/2 years on Friday and reached parity with the Swiss franc after comments from European Central Bank President Mario Draghi underscored the benefits of tighter U.S. monetary policy.

The euro fell to $ 1.2005, its lowest since June 2010, after Draghi told the German financial newspaper Handelsblatt that the ECB was less likely to preserve price stability than it was six months ago, suggesting it was ready to take bolder steps on monetary stimulus early this year.

“Markets and commentators have been talking about this for ages, but to hear it from the horse’s mouth has had a clear effect on the euro,” said David Rodriguez, a quantitative strategist at DailyFX.com, a unit of retail FX broker FXCM in New York.

The single currency was also hurt by disappointing euro zone manufacturing data. The dollar index, which measures the greenback against a basket of six major currencies, hit a fresh nearly nine-year high of 91.087 and last traded near that level.

The contrast between the U.S. Federal Reserve’s path toward rate increases and looser policies in Europe and Japan boosted the dollar last year, and many analysts anticipate that divergence in policy to fuel a continued dollar rally in 2015.

The dollar hit parity, or equal value, with the Swiss franc for the first time in over four years. Draghi’s comments put pressure on Switzerland’s central bank to ease further in order to maintain a 1.20-franc-per-euro limit, said Alan Ruskin, global head of currency strategy at Deutsche Bank in New York.

The SNB imposed that limit in 2011, when the currency’s strength squeezed exporters and threatened deflation. The SNB eased policy on Dec. 18, when it said it would impose an interest rate of -0.25 percent on some large deposits held by investors in francs.

The euro was last down 0.78 percent against the dollar at $ 1.2007. The dollar was last up 0.7 percent against the Swiss franc at 1 franc. The dollar was up 0.48 percent against the yen at 120.36 yen after hitting a more-than-one-week high against the Japanese currency of 120.74 yen.

Sterling hit a 17-month low of $ 1.5332 after data showed British manufacturing expanded less than expected in December.

On Wall Street, the benchmark S&P 500 stock index was last down 0.27 percent.

(Reporting by Sam Forgione; Additional reporting by Anirban Nag in London; Editing by Jonathan Oatis)