* Dollar index near 2-month high after Yellen fans rate hike hopes

* Yen gains slightly after Japan output data

* Australian dollar jumps on strong building, exports data

By Hideyuki Sano

TOKYO, May 31 (Reuters) - The dollar hovered near its highest level in two months against a basket of currencies on Tuesday on growing expectations of an imminent U.S. interest rate hike, while the Australian dollar jumped on surprising strong local economic data.

The dollar's index against a basket of six major currencies rose to as high as 95.968 on Monday, having jumped 4.4 percent from its 15-1/2-month low hit earlier this month at 91.919. It last stood at 95.662.

The latest spark for dollar bulls came from Federal Reserve Chair Janet Yellen, who on Friday said a rate increase in the coming months "would be appropriate," if the economy and labour market continued to improve.

The euro slipped to as low as $1.1097, its lowest since mid-March on Monday, though it has managed to bounce back from that level, which straddled its 200-day moving average. It last stood at $1.1150.

On the month, the common currency was down 2.7 percent, on course to post its first monthly loss in four months.

The dollar also fetched a one-month high of 111.455 yen on Monday before stepping back to around 111.09 yen.

Better-than-expected industrial production data and month-end buying by Japanese exporters helped to support the yen for now.

The data tempered expectations that the Bank of Japan could expand its stimulus as soon as in June after Japanese Prime Minister Shinzo Abe pitched a plan on Monday to delay next year's sales tax hike to fellow ruling party members.

Although some of them expressed concerns that such a move would signal a failure of his policies to reflate the economy out of stagnation, Abe is widely expected to have his way.

"The dollar could rise above 112 yen if the Fed raises rates next month. But I doubt it could reach those levels on Japanese factors," said Ayako Sera, market strategist at Sumitomo Mitsui Trust Bank.

Sera also believes that some in the market are misguided in expecting the BOJ to take easing steps just because the government is planning a stimulus budget.

"The government is back-pedalling on fiscal reforms, which could make it difficult for the BOJ to move," she added.

For now, a clear break of the 111.23 - a major resistance from the cloud top on Ichimoku charts - could brighten its technical outlook and could pave the way for a retest of its April 25 peak of 111.90 yen.

If U.S. payrolls due on Friday show solid job growth and if Yellen signals a rate hike in her speech on the following Monday, the dollar could break above the previous April peaks, said Koichi Takamatsu, manager of forex at Nomura Securities.