NEW YORK, Oct 4: The dollar held in a narrow range against the other main currencies Friday as traders tried to gauge the impact of a massive financial sector bailout and digested news of bigger-than-expected US job losses.

The euro, which had at one point plunged to a near 12-month low of $1.3703, later rebounded and was trading at $1.3781 at 2100 GMT against $1.3818 late Thursday.

The US currency was little changed at 105.27 yen from 105.28 on Thursday.

Trading was volatile as dealers kept a close eye on events in Washington, where the US House of Representatives approved a $700-billion plan to salvage the shattered financial system and restore confidence to global lenders.

The measure was quickly signed by President George W. Bush.John Kicklighter at Forex Capital Markets cited a “muted reaction” from traders, suggesting there may be skepticism over this bill’s effectiveness.

While markets tried to assess the impact of the plan, trade was impacted by the troubles in the banking sector.

The euro weakened against the dollar after a surge in demand for dollars, said Christine Li at Moody’s Economy.com.

The escalation in the financial turmoil has caused many European financial institutions to seek to repay their dollar loans, causing a shortage.

Earlier in the day, the euro was under pressure from comments by European Central Bank head Jean-Claude Trichet that were taken to mean a reduction in eurozone interest rates, perhaps as early as next month.

Trichet signalled a shift at the ECB, where it now appears that threats to eurozone growth, rather that inflation, are concentrating minds.

Analysts said the change in priorities pointed to a cut in the benchmark rate, which currently stands at 4.25 per cent, far higher than the United States Federal Reserve’s 2.00 per cent.

The dollar’s gains were later stalled on a report from the US Labour Department that the US economy lost 159,000 jobs in September as the weight of a housing collapse and credit crunch hit a broad swath of industries.

The report, seen as one of the best indicators of economic momentum, showed a sharp rise in the number of cuts after 73,000 job losses in August.—AFP