Like as in friendship, clearly yes. Like as in boyfriend, not necessarily, and "cute" isn't necessarily a compliment.
>>She has asked me to hug her on a couple of occasions, although I have refused because I don't like touching.
Makes me wonder where you think this might go. Maybe just stay friends if you don't want any of that intimate stuff.
>>I also notice her cleavage a lot
Yeah, you're a guy. And probably not gay. I'm 47 and I still notice lots of cleavages. I think I'm getting better at disguising/minimising it, although if there's no/little chance of being spotted it might be more than a fleeting glance. They somehow seem designed to pull us in, particularly if their owners like to put them on show. Try to maintain eye contact though, or pick something else (e.g. nose) if you find that uncomfortable. Tricky though if you're sitting directly opposite her. Try to sit at right angles to her, that gives you lots of other stuff to look at, or if you're at a table for 4, opposite but not immediately opposite. Avoid sitting next to her, because you still want to be able to look at her, and next to implies more closeness than exists.
If you are interested in dating her, maybe just ask her casually, almost as an afterthought, if she might be interested in taking the friendship up a level (if she asks what you mean, follow it up with something like "you know, dating, that sort of stuff"). If you keep it light then it could be something you could both easily handle without any fear of rejection, and even if she laughs and says no, that's easier for you, and isn't necessarily a final answer; she might just be surprised and taking a "safe" option. Don't make it the first or last thing and plan to follow the question&discussion up with something on a completely different subject (make sure you have it safely in mind; write a hint on your hand if necessary).