NZ dollar hits near two-month highs, Aussie lags

* Aussie & kiwi holding near at multi-week highs vs USD

* USD still reeling from Friday's payrolls disappointment

* NZ business sentiment hits 14-year high in Q4

By Ian Chua and Naomi Tajitsu

SYDNEY/WELLINGTON, Jan 14 (Reuters) - The Australian and New Zealand dollars held near multi-week highs against the dollar on Tuesday as the greenback continued to struggle after a shakeout of long positions in the wake of disappointingly soft U.S. jobs report.

The kiwi dollar scaled a near two-month peak of $0.8391

NZD=D4 , further boosted by a survey showing New Zealand business sentiment rose to a 14-year high in the fourth quarter of 2013.

It last traded at $0.8371, while the Aussie was at $0.9029

AUD=D4 , not far from an overnight high of $0.9087, a level not seen since Dec. 11. It had been trading at $0.8890 just before the U.S. jobs report on Friday.

"We see scope for the AUD recovery to extend to 0.9165/80," analysts at Westpac Bank wrote in a note to clients.

For the kiwi, the upbeat poll by the New Zealand Institute of Economic Research bolstered the view the economy was expanding strongly and that interest rates will start rising soon. News Search ID:nW9N0J600L

On a trade-weighted basis =NZD , the kiwi reached a seven-month high of 78.83. It rose against the euro EURNZD=R , which slumped to a seven-week low around NZ$1.6265 and was supported against the Aussie, yen and other currencies.

But further big gains may be difficult, BNZ currency strategist Kymberly Martin said.

"A lot of the good news is factored into the kiwi, so broadly we would say that the NZD has peaked," she said.

"But the kiwi is very well supported and we don't see anything that will knock it out of the broad NZ$0.8100-NZ$0.8500 range in the first half of the year," she added.

In contrast, Australia is expected to muddle through 2014 with many parts of the economy responding slowly to record low interest rates while the mining investment boom cools even further.

As a result, the Reserve Bank of Australia (RBA) still has a presumed easing bias though the central bank would prefer to see any further stimulus come through a lower currency rather than lower rates.

The Aussie fell more than 14 percent in 2013 but appeared to have found a floor near 88 U.S. cents for now. It also seemed to have found some support against the euro and sterling.

Indeed, the euro plumbed a one-month low of A$1.5020

EURAUD=R overnight, testing a major chart level. A breach there could pave the way for further downside.

Against sterling, the Aussie has broken clear of the 53.46-54.85 range seen since mid-December to reach one-month highs above 55 pence AUDGBP=R .

New Zealand government bond prices 0#NZTSY= were little changed, while Australian government bond futures rose with the three-year bond contract YTTc1 up 3 ticks at 97.000. The 10-year contract added 4 ticks to 95.865.

(Editing by Shri Navaratnam)

((ian.chua@thomsonreuters.com)(+61 2 9373 1871)(RM: ian.chua.thomsonreuters.com@reuters.net))

Keywords: MARKETS AUSTRALIA/FOREX