* Dollar index touches 11-year high in Asia

* Strong jobs data raise bets of earlier Fed hike

* Eurogroup meeting to discuss Greece up next

By Ahmed Aboulenein

LONDON, March 9 (Reuters) – The dollar paused after hitting an 11 1/2-year high against a basket of currencies on Monday, but expectations the Federal Reserve will raise interest rates soon are likely to underpin the greenback.

Surprisingly strong U.S. jobs data on Friday increased the chances the Fed will raise rates in mid-year. That pushed Treasury yields higher and widened their gap with government bonds from Japan and the euro zone.

The yield spread fuelled the greenback’s rally last week, when the dollar index posted its biggest weekly gains since late 2011. It ran into some profit-taking in Europe on Monday, and the index was last down 0.2 percent at 97.45.

“The dollar has travelled a long way in a pretty short time. U.S. yields have risen but they need another catalyst to move further higher. So until then, we could see some consolidation,” said Jeremy Stretch, head of currency strategy at CIBC World Markets, London.

The Fed’s readiness to raise rates gave a clear advantage to holding dollars, since the European Central Bank, the Bank of Japan and many other central banks are looking to ease policy further.

The euro rose to $ 1.0906, having slid to $ 1.0822 early in Asia, falling below Friday’s trough of $ 1.0839 to reach lows not seen since September 2003. The European Central Bank started its 1 trillion-euro bond-buying programme on Monday, which is expected to keep the euro under pressure.

Petr Krpata, a currency strategist at ING, said the euro’s gains would be short-lived, attributing them to profit-taking on the dollar.

“The start of quantitative easing will be one of the key reasons why the euro will remain soft,” Krpata said. “We think the key driver to the euro’s downfall against the dollar will be the further increase in short term interest rates in the U.S.”

Against the yen, the dollar traded at 120.95, close to Friday’s three-month high of 121.29. In Europe, the focus was on the outcome of a meeting of euro zone finance ministers, who will discuss reforms recently promised by Greece.

Athens and its euro zone partners struck a deal last month to extend its bailout programme by four months. Cash-strapped Greece has until April to conclude a bailout review and qualify for further aid.

ECB executive board member Benoit Coeure told a Cypriot newspaper on Sunday the ECB was looking forward to working with Greece to complete its review, but time is running out.

“Greece and the ECB’s asset-buying programme give it plenty of reason for it to stay under pressure,” added CIBC’s Stretch.

(Additional reporting by Anirban Nag; Editing by Larry King)