By Chibuike Oguh and Alden Bentley

NEW YORK (Reuters) -The U.S. dollar stalled near a seven-week high on Monday as investors reassessed their positions after last week's strong U.S. jobs data and as fears that Middle East tensions would spill into a wider conflict drove bids for safe havens.

The closely-watched jobs report for September showed the biggest jump in nonfarm payrolls in six months, a drop in the unemployment rate and solid wage rises, prompting markets to scale back bets on further hefty U.S. rate cuts.

Markets expect the Federal Reserve to cut rates by just 25 bps in November, rather than 50 bps, following the jobs data. According to CME's FedWatch tool, markets are pricing in a 85% chance of a quarter point cut, up from 47% a week ago, and a slim 0.15% prospect of no cut at all.

A rise in the yield on the benchmark U.S. 10-year note above 4% for the first time in two months was also a psychological support.

Against the Japanese yen, the dollar weakened after Atsushi Mimura, Japan's top currency diplomat, issued a warning against speculative moves on the foreign exchange market.

Dollar/yen fell 0.49% on the day to 147.98 after hitting its highest since August 15 at 149.10 overnight.

"The market got cautious as we approached 150 on the yen, but I don't think this is a big move yet," said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York.

The dollar index measuring the greenback against a basket of six currencies slipped 0.07% to 102.46, having risen on Friday to 102.69, its highest level since mid August. The dollar logged a weekly gain of more than 2% last week, its biggest in two years.

In the Middle East, Hezbollah fired rockets at Israel's third largest city Haifa early on Monday as Israeli forces looked poised to expand ground incursions into southern Lebanon on the first anniversary of the Gaza war, which has spread conflict across the region.

The euro was off just 0.01% at $1.0975, feeling some pressure after German industrial orders fell significantly more than expected in August, adding to signs that manufacturing in Europe's largest economy remains in the doldrums.

Overall though the tone was still dollar-positive, along with currencies seen as flight-to-safety rivals on worries about the geopolitical picture.

"As you look across some of the more risk-sensitive currencies in the G10 space, you do have the dollar generally stronger, but a lot of the traditional safe havens -- yen, Swiss and the dollar -- are relative outperformers today," said Brian Daingerfield, foreign exchange strategist at NatWest Markets, New York.