(REUTERS) - The euro rose for a fifth straight session against the dollar on Friday, bolstered by speculation that the European Central Bank may lend to weak euro zone countries through the International Monetary Fund.

The drop in U.S. unemployment rate to 8.6 percent last month also stoked the market's appetite for risk, even though the headline figure of 120,000 new jobs created was well short of the whisper number of 200,000 touted just before the release of the report. For more, click on [ID:nOAT004918].

The payrolls data also lifted the euro, which was on track for its best weekly gain since late October, and some of the risk-friendly currencies such as the Australian and New Zealand dollars.

Gains in the euro, however, kicked off after talk that the ECB would make loans available to the IMF for debt-ridden euro zone countries. That sparked hopes of some kind of solution to the European sovereign debt crisis.

We've seen a lot of improvement lately -- the U.S. data is better, the sentiment surrounding Europe has improved in the last few days on the hope a grand plan, so all that is out there in the market,: said Bob Sinche, global head of currency strategy at Royal Bank of Scotland in Stamford, Connecticut.

This is good enough to consolidate the gains we've had. I think the euro around $1.35 is not a bad level at which to end the week.

In early New York trading, the euro was last up 0.3 percent at $1.35024. It hit a high $1.35505 on electronic trading platform EBS immediately after the U.S. non-farm payrolls data, currency's highest since November 22.

Investors though were wary of buying the single currency aggressively, however, given that it has already rallied more than 1 percent this week and it remains vulnerable to the region's debt problems.

I think the issue is that there is still so much risk associated with Europe. No one wants to be long the euro going into the weekend, said Michael Woolfolk, senior currency strategist, at BNY Mellon in New York.

In other currencies, the dollar was down 0.2 percent against a currency basket at 78.122 .DXY. Against the yen, the dollar edged up 0.2 percent to 77.870 yen.

With the U.S. data out of the way, markets are now awaiting a European Union summit on December 9 for signs of progress on the euro zone debt crisis.

French and German leaders are meeting next Monday to outline joint proposals to be discussed at next week's EU meeting, which is viewed as yet another make-or-break meeting for the 12-year-old currency bloc.

(Additional reporting by Steven C. Johnson and Wanfeng Zhou; Editing by Chizu Nomiyama)