* Euro falls broadly after Fitch downgrades Russia
* Renewed risk aversion boosts dollar, yen
* Econ worries persist as US planned layoffs at 7-yr high
* Jitters ahead of U.S. non-farm payrolls
(adds quotes, updates prices, changes byline)
By Jessica Mortimer
LONDON, Feb 4 (Reuters) - The euro tumbled against the
dollar and the yen on Wednesday after Fitch downgraded Russia's
long-term foreign and local currency ratings, sparking fears of
a steep downturn in eastern Europe.
The yen and the dollar also gained broadly on a renewed
flight into perceived safer assets as investors fretted about
the outlook for the global economy, with jitters setting in
ahead of key U.S. non-farm payrolls data on Friday.
The dollar extended gains against the euro after a report
from Challenger pointed to a sharp deterioration in the U.S.
jobs market, showing planned layoffs in the country at a 7-year
high.
Further indications on the U.S. jobs market are due at 1315
GMT, when ADP private U.S. payrolls numbers are released.
"Sentiment can turn on a dime and the more optimistic
sentiment from yesterday has reversed today," Westpac economist
James Shugg said.
"Any indication of a large fall in U.S. jobs will probably
cause risk aversion to increase again," he said.
At 1251 GMT, the euro fell 1.4 percent against the dollar to
$1.2849 <EUR=> and by 1.7 percent against the yen to 114.43
<EURJPY=>.
The dollar index <.DXY> gained around 1 percent to a session
high of 85.920. Against the yen, the dollar dipped 0.3 percent
to 88.97 <JPY=>.
The euro fell below $1.29 against the dollar late morning
after Fitch downgraded Russia's ratings to 'BBB' and said more
cuts were possible due to low commodity prices, dwindling
reserves and corporate debt problems [].
This has sparked concerns that a sharp downturn in the
region could hit the euro zone economy hard.
"Any bit of news of further damage to customers of the euro
zone is not helpful for the euro," Westpac's Shugg said.
Analysts also noted that as outflows from Russia have put
pressure on the rouble, Russian authorities have to sell euros
to maintain the balance of their reserves portfolio, further
weighing on the single currency.
"The Russian central bank is obviously being very active in
the management of its currency within the basket," BNP Paribas
senior currency strategist Ian Stannard said.
Data released earlier showed deterioration in the euro
zone's dominant services sector slowed slightly in January
[], but separate numbers showed euro zone retail
sales fell more than expected year-on-year in December
[].
Heightened risk aversion also hit the Australian dollar,
which fell 1.7 percent against the U.S. dollar to $0.6414 and by
around 1.8 percent against the yen <AUDJPY=>.
Analysts were also nervous ahead of rate decisions by the
European Central Bank and the Bank of England on Thursday.
(Reporting by Jessica Mortimer; Editing by Victoria Main)
