Dollar gains with no surprise in US job report

The European Central Bank also raised its benchmark interest rate by a quarter percentage point to 4.25 percent in an effort to halt rising inflation.

The 15-nation euro bought $1.5699 in late New York trading, down from $1.5888 in trading Wednesday.

The British pound bought $1.9829, down from the $1.9936. The dollar bought 106.77 Japanese yen, up slightly to the 105.99 yen a dollar bought the night before.

The U.S. Labor Department says employers cut 62,000 jobs in June. Economists predicted the number of jobs would fall but investors appear somewhat relieved that the losses weren't steeper.

Employment numbers are critical because consumers who are out of work or are nervous about losing their job are likely to cut their spending. They've already become very cautious because of higher food and energy prices.

Inflation has been testing central banks around the world as commodity prices have spiked in a surge of new global demand. While higher interest rates can curb inflation they can also slow economic growth as money becomes more expensive to borrow.

The ECB's rate hike came despite some worries that it could dampen growth. Bank president Jean-Claude Trichet was expected to explain the decision at a news conference, with attention focusing on whether more increases are coming.

Trichet has stressed that his main objective is to keep prices stable, and all but promised an increase this month at last month's meeting. But he has also suggested that repeated interest rate hikes are probably not likely.

"The other data we saw today was unambiguously weak, but not weak enough to cause further downside in U.S. yields," said Dan Katzive, a senior currency strategist with Credit Suisse. "If anything, it will help the dollar to stabilize."