(Reuters) - The dollar and the safe-haven yen rose on Monday on concerns about the outlook for the global economy and company earnings, recouping losses from the previous session that followed strong U.S. jobs data.
Investors were cautious as the third-quarter earnings season gets under way and after the World Bank cut its growth forecasts for the East Asia and Pacific region, warning a slowdown in China could get worse.
The euro was down 0.7 percent at $1.2946, falling back from Friday's two-week high of $1.3072, hit after data showing U.S. unemployment rate hit its lowest since January 2009.
"There is some general risk aversion stemming probably from numerous reports that Q3 earnings reports will be poor," Rabobank analyst Jane Foley said.
"Anticipation that stock markets could be in for a bit of a difficult time, which would be reflected in risk-off across the board, could result in the dollar being better bid."
European stocks traded down 0.9 percent.
The euro came under pressure ahead of a meeting of euro zone finance ministers as the bloc's permanent bailout fund is launched. Spain is expected to top the agenda at the gathering in Luxembourg as uncertainty persists over when the country may ask for a bailout.
The euro has climbed 7.5 percent since hitting a two-year low of $1.2042 in late July, bolstered by hopes of European Central Bank action to help quell the region's sovereign debt crisis.
Analysts at Morgan Stanley advised buying the euro at $1.2950, with a target of $1.3400 and a stop at $1.2870, citing the potential for positive headlines from this week's Eurogroup and IMF meetings.
Hans Redeker, the bank's head of global currency strategy, said he expected the euro to pick up as the ECB's plan to buy peripheral bonds pushes down Spanish borrowing costs.
Uncertainty over when Spain will request aid, as it must before the ECB can start buying its bonds, has hurt the common currency.
The euro slid 1.3 percent against the yen, reaching a session low of 101.13 yen on trading platform EBS. Traders reported selling by a U.S. investment bank, with a break through its 200 day moving average at 101.79 yen accelerating the move.
Currency trading in the United States was expected to be thin on Monday as bond markets will be closed for the Columbus Day holiday. Share markets will be open, however.
AUSSIE DROPS TO THREE-MONTH LOW
The higher-yielding Australian dollar - particularly sensitive to concerns about China given the countries' close trading links - dropped to a three-month low of $1.0149.
The dollar gained broadly, trading up 0.4 percent against a basket of currencies, with its index at 79.673.
However, it fell against the yen, erasing some of Friday's gains.
The dollar was down 0.6 percent at 78.18 yen, off Friday's high of 78.88 yen when a rise in U.S. bond yields after the U.S. jobs data pushed it higher.
"The impression I get is just above 79 there's a lot of sellers," said Mitul Kotecha, head of global foreign exchange strategy for Credit Agricole in Hong Kong. He said Friday's data would not be enough to convince market participants that the U.S. jobs market was headed toward a strengthening recovery.
According to a business sentiment survey published by the Bank of Japan last week, the average dollar/yen exchange rate assumption that major Japanese manufacturers are using in their business plans for the six months to March 2013 is 78.97 yen.
That suggests Japanese exporters may want to sell the dollar if it rises beyond that threshold, although they are unlikely to be active on Monday, with Japanese markets also closed for a holiday.
