By Daniel Kruger and Jamie McGee Nov. 7 (Bloomberg) -- The dollar fell for a third day against the yen and dropped versus the euro as the U.S. shed more jobs in October than analysts forecast, indicating the financial crisis is taking a sustained toll on the economy. The U.S. currency was headed for a 1.1 percent loss this week against the yen on concern the world's largest economy will contract even as the Federal Reserve increased buying assets and providing loans to ease the global credit crunch. ``The weakness in the economy continues,'' said Adam Boyton, a senior currency strategist in New York at Deutsche Bank AG, the world's largest currency trader. ``The dollar-yen will move lower over the day.'' The dollar dropped 0.5 percent to 97.28 yen at 8:51 a.m. in New York, from 97.75 yesterday. The U.S. currency depreciated 0.8 percent to $1.2813 per euro from $1.2715. The 15-nation euro increased 0.3 percent to 124.60 yen from 124.29. U.S. employers eliminated 240,000 jobs last month after shedding a revised 284,000 positions in September, the Labor Department reported today. The median forecast of 78 economists surveyed by Bloomberg News was for a decline of 200,000 in October. The unemployment rate increased to 6.5 percent. The number of Americans receiving unemployment benefits surged to the highest level since 1983, the Labor Department reported yesterday. A total of 3.843 million workers got unemployment-insurance checks in the week ended Oct. 25, up 122,000 from the prior week. Obama's Plan About three weeks ago, as financial markets reeled and the crises deepened, President-elect Barack Obama increased the proposed cost of his ``middle-class rescue plan'' to $175 billion from $115 billion. The euro fell against the dollar, yen and pound yesterday after European Central Bank President Jean-Claude Trichet said the economy ``weakened significantly'' and the International Monetary Fund cut growth forecasts for the region. The ECB reduced its main refinancing rate by a half- percentage point to 3.25 percent and Trichet said more reductions may follow. The Bank of England unexpectedly lowered its key rate by 1.5 percentage point to 3 percent, and Switzerland cut its target to 2 percent. The ECB also lowered the benchmark rate by a half- percentage point on Oct. 8, joining the Fed, the Bank of England, the Bank of Canada and the Swiss National Bank in coordinated reductions. Benchmark rates are 1 percent in the U.S. and 0.3 percent in Japan. `Mr. Yen' Japan will benefit from a strong yen because it will hold down prices for raw materials, said Eisuke Sakakibara, formerly the nation's top currency official. ``I still believe a strong yen is in the national interest of Japan, particularly in this situation when raw material prices will increase,'' Sakakibara said in an interview on Bloomberg Television in Singapore yesterday. The yen may strengthen to 80 per dollar as trades in which investors get funds in countries with low borrowing costs and buy higher-yielding assets elsewhere unwind, said Sakakibara, who was dubbed ``Mr. Yen'' during his 1997-1999 tenure at the Finance Ministry because of his influence over currency markets. Japan's target rate is the lowest in the industrialized world. The yen's 15 percent increase against the dollar this year and 32 percent advance versus the euro prompted Finance Minister Shoichi Nakagawa to say last week that the government was ready to act as needed to limit the gains. For Related News: Stories on the euro and dollar: {TNI DOLLAR EURO} Stories on currencies: {NI FRX} To contact the reporters on this story: Daniel Kruger in New York at dkruger1@bloomberg.net; Jamie McGee in New York at jmcgee8@bloomberg.net

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