Euro falls against dollar on debt fears

NEW YORK (Reuters) - The euro fell Friday to its lowest level against the dollar since May, beaten by increased risk aversion after the cost of insuring the debt of some euro area countries climbed to record levels over concerns about public finances.

The dollar was pushing against the euro and yen after a report showed U.S. employers continued to cut jobs in January despite a decline in the unemployment rate.

"The situation in the euro zone will continue to overshadow the U.S. economic performance, including the employment report today," said Vassili Serebriakov, a strategist at Wells Fargo Bank in New York.

"There is no easy way for the euro area, and is not moving. This will keep the euro under pressure," he added.

On the morning of New York, the euro was down 0.3 percent on the day at $ 1.3687, having fallen to $ 1.3649, according to Reuters data, its lowest level since May 2009.

The euro is headed for a weekly decline of 1.1 percent, its fourth consecutive week in negative territory. The European currency has fallen about 10 percent since its peak in December 2009 of $ 1.5140.

Fears about the fiscal health of the peripheral economies in the euro area have been increasing in recent weeks, raising the cost of insuring the debt of Gracia, Spain and Portugal to a possible cessation of payments to record highs, the firm said CMA DataVision .

The yield spread of Greek 10-year bonds and German Bunds notes widened in the session due to uncertainty about how Athens can meet its financial obligations, prompting investors to abandon the euro to opt for safety dollar.

Against the yen, the euro fell to a session low of 122.00 units, operating at levels close to the minimum on Thursday, a floor that was not seen since early 2009.

The dollar gained 0.5 percent against the yen at 89.44 points, after having climbed to 89.89 yen after the nonfarm payrolls report in the U.S..

The price of the dollar against the yen was volatile before and after data, with a sharp gain before the report a big drop after that and a subsequent rebound.

The dollar index, an estimate of the performance of the greenback against a basket of six currencies benchmark, rose to 80.435, its strongest level since July 2009. Subsequently, the indicator gained 0.4 percent to 80.223.

Investors will be pending on the session of a meeting of finance ministers and central bank representatives of the Group of Seven in Canada that will begin later in the day, but analysts say it is unlikely that exchange or system exchange are included in the final communiqué of the meeting.

(Additional reporting by Vivianne Rodrigues and Steven C. Johnson)