(Reuters) - The dollar slipped against the yen in volatile trading on Friday after a key U.S. April jobs report painted a mixed picture about the health of the economy.

U.S. employers added 115,000 workers last month, well below expectations of 170,000, but the unemployment rate still fell to 8.1 percent and jobs growth data in previous months was revised upwards.

The disappointing headline reading will likely compound fears that the U.S. economy is losing momentum and fuel expectations of a third round of quantitative easing by the Federal Reserve.

While certainly disappointing, today's employment report does have a silver lining - a drop in the unemployment rate with upward historical revisions, said Michael Woolfolk, senior currency strategist at BNY Mellon in New York.

Nonetheless, the headline disappointment increases the likelihood that (Fed Chairman Ben) Bernanke will move forward with QEIII later this summer in an attempt to further bolster employment growth, he said.

In early New York trading, the dollar fell 0.2 percent to 80.06 yen. It hit a session low of 79.95 yen immediately after the release of the jobs data, before bouncing back to a session high of 80.35 yen.

The euro was little changed at $1.3153.

The euro earlier came under pressure after a survey showed the euro zone services sector contracted much more than initially thought in April, with particularly weak figures out of Italy and Spain.

Investors were cautious ahead of weekend elections in France and Greece, the results of which may stir doubts about the countries' commitment to fiscal austerity.

Market participants fear that parties which disagree with Europe's focus on fiscal discipline will gain sway.

(Editing by Bernadette Baum)