The dollar fell against the yen but remained higher against the pound and euro despite US employment data showing the third largest number of monthly job losses since records began in 1950.

Non-farm payroll data, a crucial barometer of the health of the US economy, showed 533,000 jobs were lost in November - the worst figure since December 1974 and that the unemployment rate rose to 6.7 per cent from 6.5 per cent in October.

The grim figure dwarfed consensus opinion among economists forecasting a figure of 350,000.

"There are simply no redeeming features in this data", said Alan Ruskin from RBS. "Weakness is evident everywhere. "Only a decline in the workforce (presumably discouraged workers) save the unemployment rate from not rising more sharply and that won't last. The data further encourages the prospect of at least a 50 basis points rate cut from the Fed on Dec 16th, but that is hardly a surprise."

Soon after the data was released the dollar was down 0.6 per cent against the yen to Y91.70. The dollar remained stronger against the pound by 0.8 per cent at $1.4559 and was 1 per cent higher against the euro at $1.2659.

Meanwhile the euro was pushed lower by after German October manufacturing orders data showed an above-expectations 6.1 per cent month-on-month drop. Falling share prices put further pressure on the single currency as Europe's bourses were lower across the board.

The euro was 0.3 lower on the pound at £0.8686 and 1.6 per cent weaker against the yen at Y116.10.

In equity markets the FTSE 100 was 2 per cent lower at 4,080.05, as miners remained under pressure following fresh falls for metal and oil prices.

In Europe, the FTSE Eurofirst 300 was down 3 per cent to 801.32 as French unemployment rose to 7.7 per cent in the third quarter. Frankfurt's Xetra Dax fell 3.5 per cent to 4,440.15 and the CAC 40 in Paris lost 3 per cent to 3,064.04.

Oil prices managed a modest recovery on Friday after sinking below the $44 a barrel level in the previous session for the first time since January 2005.

In Asia, oil stocks were an overall drag on markets.

The overall S&P/ASX 200 closed down 1.2 per cent at 3,489.9 but in Hong Kong, the Hang Seng gained 2.5 per cent to 13,846.09.