January 6, 2002	Sunday	Shawwal 21, 1422

NEW YORK, Jan 5: The dollar was mixed on Friday, falling against the yen but rising for a second session against the euro as investors erased most of the common currency’s big gains after its successful cash launch earlier in the week.

The yen rebounded against major currencies as the first day of trading in Japan after a long New Year’s holiday prompted investors to book profits on a rally that had sent the dollar soaring to three-year highs and the euro to 2-1/2 year highs against the Japanese currency. A 3 percent surge in Tokyo stocks also boosted the yen.

Positive US economic data indicating an easing in the severity of job losses in the past two months and an unexpected jump in services activity, along with a third day of robust gains in stocks, added to the allure of the greenback and US assets.

The euro retreated as the “europhoria” surrounding the near flawless launch of the new money fizzled and market players focused on the sluggish economic conditions in the euro zone, which is expected to lag the US economy’s much-anticipated rebound.

The ‘europhoria’ is close to over and it is back to fundamentals, said Tod van Name, manager of foreign exchange at Fuji Bank. Even Friday’s European data showing improvement in service sector activity and a further decline in inflation failed to help the euro.

The US Labour Department’s report showed the economy shed 124,000 jobs in the non-farm sector, well below the 371,000 drop in November and 448,000 decline in October. The unemployment rate rose as expected to 5.8 per cent in December from a downwardly revised 5.6 per cent in November.

Later in the session, the Institute for Supply Management said its non-manufacturing index rose to show a second month of growing activity in the large services sector. The report followed a key manufacturing report earlier in the week that rebounded much more than expected and indicated growth in new orders and production.

The numbers throughout the week have been generally supportive of the notion that the US economy is starting to stabilize, and that’s clearly been giving the dollar a bit of a boost here, said Jim McCormick, currency strategist at Lehman Brothers.

More important is that the equity market is doing extraordinarily well at the start of the year on growth expectations, McCormick said.

In late afternoon trade, the dollar gained more than half a per cent against the euro to trade around 89.50 cents, compared with a close of 89.92 cents on Thursday. Before Wednesday’s relief rally, the euro stood at 89 cents.

Meanwhile, sterling rebounded strongly against the euro amid ongoing debate about whether and when Britain might join European monetary union.

The euro’s coming out party fed speculation Britain would eventually scrap the pound to join the monetary union, and the pound is seen as needing to decrease in value before Britain would join. The pound gained 1 per cent against the euro to 61.87 pence, still well above its close on Tuesday of 61.23 pence.

The dollar fell more t