* Dollar eases vs euro as U.S. payrolls fan slowdown fears
* U.S. economy shed 240,000 jobs in October
* Stocks shrug off jobs; dollar rises vs yen
(Updates prices, adds quotes)
By Gertrude Chavez-Dreyfuss
NEW YORK, Nov 7 (Reuters) - The dollar slid against the
euro and a basket of major currencies on Friday after data
showed steep U.S. job losses in the last three months, although
its fall was limited by gains in the stock market.
Following a rally in U.S. equities, the dollar rose versus
the yen, with analysts saying the jobs report was not as dismal
as many had initially feared.
But October's 240,000 decline in non-farm payrolls was
higher than most market expectations and fanned fears of a much
deeper slowdown for the world's largest economy. Some in the
market had priced in job losses of as much as 450,000, which
helped cushion the impact of the data.
"The jobs number was bad, as expected, so we've seen some
selling in the dollar against the euro. But markets had already
priced in disaster," said Ken Landon, global currency
strategist at JP Morgan Chase in New York. "So we're seeing a
bit of risk aversion coming off, with stocks higher."
In midday New York trading, the euro <EUR=> was up 0.5
percent against the dollar at $1.2769. For the week, the euro
partly retraced some of its losses and was up 0.2 percent at
current prices.
Against the yen <JPY=>, the dollar slipped 0.4 percent to
98.150 yen.
The ICE Futures' dollar index <.DXY>, a measure of the
greenback's value against six major currencies, fell 0.2
percent to 85.698.
The employment report also showed a revised drop in
September jobs, the largest in nearly seven years. In total
over the three months through October, 651,000 jobs have been
slashed from payrolls, and 1.2 million so far this year. For
details of the report, click on [].
REPORT REFLECTS RECESSION
"October's jobs report continues to paint a picture of a
labor market dealing with an overarching recession," said Meny
Grauman, an economist at CIBC World Markets in Toronto.
"We are now seeing the type of triple-digit monthly job
losses that have accompanied all other U.S. recessions ... And
although indications are that massive government intervention
is taking us back from the brink, this will not be enough to
stave off hundreds of thousands of further job losses and even
higher unemployment."
Following the report, the interest rate futures market
fully priced a quarter-point cut in the federal funds rate from
the Federal Reserve in December, to 0.75 percent. Implied
prospects for a half-point cut are at 64 percent against 58
percent late on Thursday.
Still, analysts are convinced the dollar will continue
rallying despite this setback on the employment front and
increased expectations of further rate easing.
Alan Ruskin, chief international strategist at RBS Global
Banking and Markets in Greenwich, Connecticut, said the jobs
data sends a "significant negative message for risk," which
should help the dollar over the coming months.
"The dollar is in this unusual spot of responding more to
data message for risk appetite than for Fed policy, now that
dollar rates are approaching zero," Ruskin said.
Markets will closely watch President-elect Barack Obama's
news conference around 1930 GMT after a meeting with his
economic advisers.
Obama has acknowledged the urgency of revitalizing the
economy and is expected to make key appointments to his
economic team soon.
"We will be watching how equities react to Obama's briefing
and that will be key for the dollar," said Joe Manimbo, a
market analyst at Ruesch International in Washington. "We've
seen risk aversion come off a bit. We will have to wait and see
whether he can reassure the market further and then we will
probably see some selling in the dollar, except perhaps against
the yen."
(Editing by Dan Grebler)
