By Cecile Lefort and Adrian Bathgate SYDNEY/WELLINGTON, Dec 8 (Reuters) - The Australian and New Zealand currencies fell against the U.S. dollar on Wednesday as a spike in U.S. Treasury bond yields helped spark a broad rally in the greenback. News that North Korea test-fired artillery shells and worries about an interest rate hike in China this weekend further conspired to drive both the Aussie and kiwi lower in a jittery market. The Australian dollar fell to as low as $0.9780, nearly 2 full cents off the overnight high of $0.9966. It was last at $0.9791, down about 0.3 percent on the day. Immediate supported is seen at the 14-day moving average around $0.9775, a break of which could pave the way to $0.9739, the Dec. 3 low. The yield on 10-year U.S. Treasuries shot above 3.20 percent in Asia, its highest level since late June, as a sell-off continued after a proposed extension of tax cuts promised to give a much-needed lift to economic growth. The spread between the 10-year Australia and U.S. yields last stood at 240 bps, down from highs of 275 bps set last month. "It's definitely a U.S. dollar story today. There's a fair bit of confusion out there, but ultimately, the driver is U.S. yields," a dealer said. Markets shrugged off a better-than-expected 1.9 percent rise in Australian housing finance, with traders saying the data had little bearing on monetary policy. The Reserve Bank of Australia left interest rates unchanged at 4.75 percent on Tuesday and released a brief statement that reinforced views it was in no hurry to tighten policy. November employment data due on Thursday could be more interesting. Analysts polled by Reuters expect employment to rise 19,000 and the unemployment rate to ease to 5.2 percent, from 5.4 percent. "Perhaps the risk for the market, in light of some recent weak numbers, is to see signs of slower employment growth," said Tony Morris, rate strategist at ANZ. "That would just confirm current market pricing for any modest chance of further rate hikes. Clearly if the number comes above that, markets will move quickly to price in a little bit more in terms of interest rate rises next year." Tracking the sell off in U.S. Treasuries, Australian bond futures fell sharply with the 3-year contract shedding 0.10 points to 94.920, while the 10-year shed 0.165 points to 94.375. New Zealand bond yields <0#NZTSY=> also rose across the curve. The Aussie dollar outperformed its kiwi counterpart, reaching to a five-week high of NZ$1.3042, before easing back to last stand at NZ$1.3001 . Against the greenback, the New Zealand dollar lost about half a cent on the day to $0.7524. Its slide was halted by support at $0.7516, with resistance at $0.7586. Not helping the kiwi, third quarter manufacturing sales and residential building work pointed to a soft reading for growth figures. The Reserve Bank of NZ announces its latest rate decision on Thursday, but is widely expected to keep rates unchanged at 3.0 percent. Analysts will be looking closely at the nuance of the statement. Some are starting to waver from the widely-held view that rate rises will begin from the first quarter of next year in the face of sluggish data. "An unchanged stance will strengthen the case for a March hike, whereas a more dovish stance signals nothing to be done before April, with the effect on the kiwi positive and negative respectively," Westpac senior markets strategist Imre Speizer said in a note to clients.

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