The euro fell against the majority of its most-traded counterparts after Fitch Ratings cut its rating on Spain and Italy, highlighting the potential for region’s debt crisis to spread. The 17-nation currency erased gains versus the dollar as Fitch cited factors including vulnerability to the “euro-zone crisis.” The dollar pared losses against the Mexican peso and Australia’s dollar as demand increased for a refuge from the fallout of Europe’s debt crisis. The euro and other higher- yielding currencies gained earlier after a report showed U.S. employers added more jobs than forecast last month. “It’s a reminder for people that there’s still a nice laundry list of issues that they have to get through,” said Brian Kim, a currency strategist in Stamford, Connecticut, at Royal Bank of Scotland Group Plc. “People don’t want to be too long risk going into the weekend.” A long is a bet the price of an asset will rise. The euro fell 0.4 percent to $1.3378 at 5 p.m. in New York. The euro dropped 0.4 percent to 102.66 yen. The U.S. currency was little changed at 76.73 yen. Ratings Drop Italy’s rating was cut to A+ from AA- while Spain’s rating was reduced two levels to AA- from AA+. The outlook for both is negative. The ratings company maintained a rating watch negative on Portugal, indicating the nation may still be cut to below investment grade. U.S. payrolls climbed by 103,000 workers after a revised 57,000 increase the prior month that was more than originally estimated, Labor Department data showed today in Washington. The median forecast in a Bloomberg News survey called for a rise of 60,000. The jobless rate held at 9.1 percent. Federal Reserve Chairman Ben S. Bernanke said Oct. 4 that policy makers stand ready to take additional steps to bolster the “sluggish” economic recovery. Bernanke’s commitment to revive the U.S. economy comes after almost three-years of near- zero interest rates and $2.3 trillion of mortgage and government-debt purchases by the central bank since 2008 failed to boost growth. Faster U.S. job growth is a sign employers remain confident the U.S. will avoid a renewed slump, even as unemployment is forecast to remain above 8 percent through 2013. The risk that the world’s largest economy may fall back into a recession has prompted the Fed and President Barack Obama to announce further measures to sustain the expansion. Dollar Index The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against the currencies of six major U.S. trade partners including the euro and yen, rose 0.2 percent to 78.749 after earlier dropping as much as 0.7 percent. “Any kind of weakness in the dollar is an opportunity to get long dollar because there are still concerns over global growth and Greece and the euro-zone crisis,” said Eric Viloria, senior currency strategist for Gain Capital Group LLC in New York. Mexico’s peso fell 0.3 percent to 13.4598 per dollar after earlier appreciating to as much as 13.2313. It gained 3.2 percent this week, after reaching 14.1395 Sept. 23, the weakest since April 2009. The U.S. is Mexico’s largest trading partner. Aussie, Canada Australia’s dollar rose as much as 1.4 percent before trading up 0.2 percent to 97.68 U.S. cents. Canada’s dollar, which earlier advanced to as high as C$1.0235, traded 0.2 percent lower at C$1.0395 per U.S. dollar. The ECB said yesterday it will reintroduce yearlong loans and resume purchases of covered bonds to encourage lending and the Bank of England reactivated its bond-purchase program to help revive the U.K.’s faltering economy. While the ECB took steps to bolster the region’s lenders, the European Commission is pushing for a coordinated capital injection into banks. German Chancellor Angela Merkel said policy makers “shouldn’t hesitate” if it turns out financial institutions are undercapitalized. Merkel will meet with French President Nicolas Sarkozy in Berlin on Oct. 9 for their eighth one-on-one summit in 20 months. The euro has declined 4.3 percent during the past 12 months among the 10 developed-nation peers tracked by Bloomberg Correlation-Weighted Currency Indexes. The yen appreciated 8.4 percent in the same period and the dollar was up 0.1 percent. To contact the reporters on this story: Catarina Saraiva in New York at asaraiva5@bloomberg.net; Allison Bennett in New York at abennett23@bloomberg.net To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

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