The euro fell to a four-month low against the dollar on Friday ahead of U.S. jobs data and next week's bond issues from euro zone peripheral countries, while world stocks and copper eased. A surprise sharp increase in U.S. private sector job creation in December have raised expectations of stronger non-farm payrolls for the month, with economists now expecting 175,000 jobs were created, up from 140,000 earlier.

The broader hopes that has given of a more sustained economic recovery continued to boost the dollar ahead of the data, due at 8:30 a.m. ET.

Many analysts, however, said markets had become so upbeat on the payrolls that there was scope for disappointment. Some pointed to a note of caution from new U.S. claims for jobless benefits, which rose more than expected last week.

The consensus estimates suggest that U.S. non-farm payroll figures will show a rise of about 175,000, but the whisper figure is far higher than that. I think you have some room for disappointment, said Koen De Leus, strategist at KBC Securities in Brussels.

If it's a blow-out (high) figure, then the positive momentum can go on for a while.

The dollar gained 0.3 percent against a basket of major currencies <.DXY>, and 0.2 percent to 83.50 yen.

The euro dropped 0.2 percent to $1.2975 after trading as low as $1.2965 on trading platform EBS, its lowest since mid-September.

European shares eased in early trade, while U.S. stock index futures were flat to slightly lower.

Copper fell on talk that China may be preparing to tighten monetary policy shortly and gold slipped for the fifth day in a row.


There was a selloff in bonds of the most indebted euro zone governments before a series of sales next week. An EU proposal that could force those who lend to banks to bear big losses should they fail also helped knock the single currency lower across the board.

Portugal, widely seen as the next euro zone state at the risk of needing a bailout after Greece and Ireland, will lead a series of debt auctions from European nations next week.

Next week's supply in Spain, Portugal and Italy will be a good test of investor sentiment, said Nick Stamenkovic, strategist at RIA Capital Markets in Edinburgh.

It's the fear of that heavy supply which is supporting Bunds at the expense of peripherals.

Yields on 10-year Portugal's government bonds over benchmark German Bunds rose 13 basis points to 433 bps, while those on 10-year Spanish bonds over Bunds widened by 6 bps to 264 bps.

Portugal's stocks <.PSI20> lost 1 percent and Spain's blue chips <.IBEX> dropped 1.5 percent, while the pan-European FTSEurofirst 300 <.FTEU3> index shed 0.5 percent.

World stocks measured by MSCI All-Country World Index <.MIWD00000PUS> slipped 0.4 percent, down for the third straight session. In Asia, Japan's Nikkei average <.N225> edged up 0.1 percent to a fresh eight-month closing high, while China's stocks <.SSEC> ended 0.5 percent firmer. Copper prices fell for the forth straight session, down 1.4 percent and were on track for a 2.8 percent drop for the week. Gold eased 0.8 percent and is down more than 4 percent this week.

(Additional reporting by Anirban Nag, William James and Atul Prakash in London, and Vikram S. Subhedar in Hong Kong)