nonfarm jobs are expected to drop by 500000 in December

Dollar falls after weaker-than-expected ADP report Currencies Euro still seen vulnerable with pressure staying on ECB Euro zone PPI falls more than expected; German jobless up(Recasts, adds quotes, U.S. data, updates prices, changesbyline, dateline; previous LONDON) By Gertrude Chavez-Dreyfuss NEW YORK, Jan 7 (Reuters) - The dollar fell across theboard on Wednesday, reversing sharp gains against the euroearlier this week, as steep job losses in the private sectorreignited fears of a prolonged U.S recession. The report, compiled by ADP Employer Services, pointed todismal news from the U.S. government's non-farm payrolls reporton Friday and may prompt some analysts to lower their alreadyweak forecasts for the month. A Reuters poll shows U.S.non-farm jobs are expected to drop by 500,000 in December.

The dollar pushed back from nearly one-month highs againstthe euro and five-week peaks versus the yen, with investorslocking in gains, including central bank buying of euros atlower levels for reserve-management purposes and interest fromfunds. "The initial shock (of the private sector jobs report) is abig one, and the market was leaning toward selling dollars tobegin with today," said Steven Butler, director FX trading atScotia Capital in Toronto. He said in the past, the data has been unreliable, but"it's still a pretty ugly number and should keep the dollarunder pressure for the rest of the session." ADP's data showed U.S. private employers shed 693,000 jobsin December, down sharply from the revised 476,000 jobs lost inNovember and far more than economists estimated. The median of estimates from 20 economists surveyed byReuters was for 473,000 private-sector jobs lost in December.

It was last at $1.3669, up 1.2 percenton the day, recovering from near one-month lows on Tuesday,according to Reuters data. Against the yen JPY, the dollar fell to session lows at92.45, down one percent, after hitting five-week highs theprevious day The dollar last traded at 92.85 yen. Alan Ruskin, chief international strategist at RBS GlobalBanking and Markets, said recent revisions of the ADP data havebecome a more reliable barometer of the upcoming non-farmpayrolls report. "This number should then preempt much of the potentialdollar negative, bond positive, equity/risk negative responsethat could have occurred on weak non-farm payrolls data thisFriday." Ruskin thinks it will will probably "take dire real economydata to shock a market that has become numb and learned toexpect the worst." Earlier in the session, data showed euro zone producerprices fell sharply in November, logging a record monthlydecline on a sharp drop in energy costs.