FOREX-Dollar, yen rise as global gloom deepens with US jobs

* Dollar, yen remain well-bid as recession worries linger

* U.S. payrolls data show steepest fall in 34 years

* Markets fully price another half-point U.S. rate cut

* For up-to-the-minute market news, click on FXNEWS (Updates prices, adds quotes)

By Gertrude Chavez-Dreyfuss

NEW YORK, Dec 5 (Reuters) - The dollar climbed against European currencies while the yen rallied on Friday as economic worries worldwide deepened after a report showing the steepest monthly fall in U.S. jobs since 1974.

The yen had rallied to six-week highs against the dollar immediately following the U.S. non-farm payrolls report, reviving speculation the Bank of Japan, also battling a recession, may intervene in the market to temper the Japanese currency's strength, which has hurt the country's exports.

"Falling equity and commodity prices are adding to risk aversion, thereby benefiting the dollar and yen," said Michael Woolfolk, senior currency strategist at Bank of New York Mellon in New York. "Deteriorating economic fundamentals in the U.S. and overseas are adding to risk aversion, also benefiting the dollar and yen."

The employment data for November underscored the depth of the downturn in the world's largest economy, with news of a surprising fall in German manufacturing orders in October and Canada's sharp job losses last month also heightening the gloom around the world.

As the global economy worsens, analysts said investors will continue to snap up the U.S. dollar and yen as they pare back their their holdings of risky trades financed by both currencies' cheap rates.

The dollar will also benefit from continued repatriation by U.S. fund managers liquidating their overseas investments, spooked by financial and economic concerns.

In midday New York trading, the euro fell 0.9 percent against the dollar to $1.2658. The dollar rose 2.4 percent against the Swiss franc to 1.2234 francs , while sterling fell 0.4 percent to $1.4611 .

RISKS FOR DOLLAR/YEN

The dollar fell as low as 91.60 yen , the lowest since Oct. 24, according to Reuters data. It was last at 92.200, flat on the day.

The greenback had fallen to a 13-year low below 91 yen in October and that could be at risk if market sentiment deteriorates. Should the dollar fall below 90 yen, analysts say, that could raise the BoJ's alarm signals, prompting it to intervene in the market and weaken its currency.