* U.S. Sept job losses raise doubts about recovery
* Unemployment rate rises to 9.8 percent
* Weak U.S. data could weigh on dollar in long run
* Euro on track for worst week since June
(Updates prices, adds comment)
By Gertrude Chavez-Dreyfuss
NEW YORK, Oct 2 (Reuters) - The dollar slid against most
major currencies on Friday, weighed down by fears that a
larger-than-expected number of job losses in September could
derail a U.S. economic recovery.
Investors initially bought the dollar versus the euro after
the release of the jobs data in a flight-to-safety bid. But
dollar gains were modest, and analysts suggested caution in
buying the U.S. currency amid signs the recovery could stall.
U.S. job losses last month reached 263,000, far above
expectations, with the unemployment rate rising to 9.8 percent,
as expected. See []. Analysts said the September
payrolls figure was actually closer to the number being talked
about on Wall Street.
"The problem for the U.S. economy has shifted from loss of
jobs to the lack of jobs growth, which is likely to put further
pressure on the White House and Congress to devise further jobs
stimulus efforts," said Michael Woolfolk, senior currency
strategist, at BNY Mellon.
Woolfolk added that the dollar downtrend remains intact and
"and will be in place until the Fed signals it will begin
lifting interest rates."
Still, September's job declines were half the pace seen in
early 2009 and were a far cry from the more than 700,000 plunge
recorded in January.
"At some point job losses will turn into gains, but we are
still well off that point, leaving consumers very vulnerable in
the months ahead," said Meny Grauman, senior economist at CIBC
World Markets in Toronto.
In midday trading, the euro <EUR=> surged to session highs
against the dollar to $1.4642 after falling to Friday's lows
following the release of the jobs report. It was last at
$1.4585, up 0.4 percent.
Despite the euro's gains, however, the euro zone currency
was on track for its worst week since early June.
The dollar turned higher against the yen at 89.66 <JPY=> ,
up 0.1 percent, after trading lower for most of the session.
The ICE Futures dollar index <.DXY> dropped 0.3 percent to
76.940. The index was on pace to post it best weekly gain since
August.
The U.S. currency, however, was supported against
high-yielding "commodity" currencies, including the Australian,
and Canadian dollars, which were hit by a 1.7 percent slide in
European shares <>.
The Australian dollar fell 0.8 percent to US$0.8641 <AUD=>,
while the U.S. dollar rose 0.2 percent versus the Canadian
currency to C$1.0851 <CAD='.
The dollar mainly benefited from weakness in global equity
and commodity markets after soft U.S. jobless and manufacturing
data on Thursday renewed global recovery concerns. That
triggered profit-taking in those assets and higher-yielding
currencies.
(Additional reporting by Nick Olivari; Editing by Kenneth
Barry)
