EMERGING MARKETS WEEK-Weak commodity prices to hurt EM

NEW YORK, Dec 7 (Reuters) - Emerging markets are likely to continue their downward spiral this week, pressured by a slump in commodity prices as demand wanes due to the intensifying U.S. recession.

On Friday, U.S. data showed employers cut 533,000 jobs from payrolls in November, the most in 34 years as the year-old recession hit broad sections of the economy.

Oil, a key commodity exported mostly by emerging economies, dropped more than 6.0 percent in price to a four-year low on Friday as the job losses reflected waning demand in the world's top energy consumer.

Oil prices settled at $40.81 a barrel, the lowest since Dec. 10, 2004, and way down from highs over $147 a barrel reached in July.

"The impact of collapsing demand on commodity prices implies pressure across the entire emerging market universe, including Latin America, Africa and the Middle East, and Russia," Barclays Capital said in a research note.

"With these dynamics now well established, we expect economic data to disappoint across EM over the coming week."

With many developed countries either in recession or heading there, policy-makers are becoming increasingly aggressive and central banks have cut interest rates in the past week.

This week's focus is likely to switch to Latin America, where central bankers will meet in Brazil, Chile and Peru. Analysts expect the banks to keep rates unchanged.

Brazil's benchmark lending rate is currently at 13.75 percent, Chile's is at 8.25 percent and Peru's is at 6.5 percent.

The MSCI Latin American stock index .MILA00000PUS fell 2.63 percent on Friday while sovereign global bonds eased, with the Brazilian global 2040 , considered the emerging market benchmark paper, down 0.438 point in price to bid 117.500.

OIL EXPORTERS EYED

Venezuela and Ecuador will be watched as these two OPEC members watch the price of oil plummet and their coffers dwindle.

Ecuador is most vulnerable as it has seen the value of its sovereign bonds reach default levels after President Rafael Correa delayed a coupon payment of its 2012 global bond.

Correa is using a 30-day grace period on the bond to decide on his next move over loans he considers riddled with irregularities when issued by past governments. Investors hope the government will pay the coupon by Dec. 15.

However, Correa has said he will prioritize social programs for the poor ahead of payments for foreign debt investors.

With Ecuador's 2009 budget based on the assumption of a price of $85 per barrel for benchmark West Texas Intermediate crude oil, the country is likely to experience tough times ahead with oil exports priced $15 lower than WTI and its economy dollarized. (Editing by Dan Grebler)

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.

Brazil cenbank to offer $1.5 bln in forex swaps

SAO PAULO, Dec 5 (Reuters) - Brazil's central bank said it will offer up to $1.5 billion in dollar swaps in an auction on Friday as it seeks to add liquidity and reduce volatility in the foreign exchange market.

The bank will offer 30,000 contracts in the auction.

Previously, the bank sold an unspecificied amount of dollars from its international reserves in three separate auctions.

Brazil's currency, the real BRBY, pared losses shortly after the announcement of the swap auction but was still trading more than 3 percent weaker at 2.6 per dollar.

Belarus forex reserves decline to $4.544 bln

MINSK, Dec 5 (Reuters) - Belarus's foreign exchange reserves fell to $4.544 billion as of Dec. 1 from $4.801 billion at the beginning of November, despite receiving a $1 billion loan from Russia, according to central bank data made public on Friday.

Reserves of the ex-Soviet state have been falling steadily since August when authorities began supporting the Belarussian rouble, pressured against the dollar by the global financial crisis.
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Reserves stood at $3.4 billion on Nov. 1, 2007.

'At a time when currency revenues of our enterprises are getting smaller, the central bank must ensure the stability of the national currency,' central bank spokesman Anatoly Drozdov told Reuters.

The Belarussian rouble has slipped to 2,174 to the dollar from 2,111 in September.

Belarus is currently engaged in discussions with the International Monetary Fund on a $2 billion loan authorities describe as a 'safety cushion'. A new mission is due to arrive in the ex-Soviet state later this month.

Brazil central bank sells $314.6 mln in forex swaps

SAO PAULO, Dec 4 (Reuters) - Brazil's central bank sold about $314.6 million in dollar swaps in an auction on Thursday as part of an ongoing effort to add liquidity to the foreign exchange market.

The bank sold 6,320 of 10,000 contracts on offer.

It called the auction after the local foreign exchange market had closed. It normally holds swap auctions during trading hours.

Brazil's currency, the real BRBY, slumped 1.3 percent on Thursday in volatile trade to 2.508 per dollar, its weakest close since May 2, 2005. It was the third straight day that the real has fallen.

REFILE-FOREX-Dollar falls vs euro after ECB cut, jobs data loom

* ECB cuts rates 75 bps, BoE by 100 bps

* Euro rises versus dollar, hits record high versus pound

* Investors await U.S. nonfarm payrolls report Friday

* For up-to-the-minute market news, click on FXNEWS (Recasts, updates prices, adds quotes, changes byline)

By Wanfeng Zhou

NEW YORK, Dec 4 (Reuters) - The U.S. dollar fell against the euro on Thursday as some investors lauded the European Central Bank's bolder-than-expected interest rate cut as a proactive step to stave off a deep recession in the 15-nation region.

The ECB, seen by market participants as being behind the curve in lowering borrowing costs to boost growth, made its biggest ever cut, lowering benchmark interest rate by 75 basis points to 2.5 percent. Most economists had expected a smaller, 50 basis point step this month. For more, see [ID:nL4623589].

The British pound also bounced off session lows against the dollar. Earlier, the Bank of England cut its key rate by 100 basis points to 2 percent, the lowest level since 1951, and said further steps would be required to prevent a credit squeeze tipping the economy into deep recession. See [ID:nL4304319].

"The markets are beginning to reward those currencies whose central banks are taking the appropriate policy steps, which means cutting rates," said Ken Landon, global currency strategist at JPMorgan Chase in New York.

"People are focused on future growth and anything that would help boost growth in the future would be probably good for a currency right now."

In late trading in New York, the euro was up 0.5 percent against the dollar at $1.2771, more than two cents from the session low of 1.2550.

The pound was down 0.8 percent at $1.4651 , having earlier touched a more than 6 year low of $1.4471. The pound hit a record low against the euro at 87.25 pence. .

"The market has given the euro the benefit of the doubt, as the ECB cut about as aggressively as they could have reasonably been expected to," said Michael Woolfolk, senior currency strategist at The Bank of New York Mellon in New York.

"Whereas rate cuts normally undermine a currency, right now we're seeing something of an alleviation of uncertainty about the European economy."

The yen rose sharply, as falling stock prices and persistent worries about a deepening global economic downturn prompted investors to keep unwinding riskier positions.

FOREX-Dollar little changed, traders await US jobs data

* Dollar little changed, market awaits U.S. jobs report

* Euro holds gains after big ECB interest rate cut

* Weak jobs reading may spur risk aversion, boosting dollar

(Changes byline, dateline, adds comment, updates throughout; previous TOKYO)

By Naomi Tajitsu

LONDON, Dec 5 (Reuters) - The dollar was little changed against the euro and the yen on Friday, as investors awaited U.S. jobs data which is expected to show that the U.S. economy is deteriorating further and may need more interest rate cuts.

The euro held slight gains made the previous day, when the European Central Bank delivered its biggest interest rate cut ever, slicing 75 basis points off its key lending rate to 2.75 percent to support its economy in the face of a global recession. Traders awaited U.S. non-farm payrolls for November, which are forecast to show a loss of 340,000 jobs. Such a reading would mark the biggest monthly drop in more than two decades.

Analysts said that speculation was growing that the figure could be even worse, and currencies were likely to take a cue from how equity markets react to the announcement at 1330 GMT.

"Markets are prepared for quite a big negative number," said Ian Stannard, senior foreign exchange strategist at BNP Paribas in London.

A big negative figure would add to the view that the U.S. economy is slowing down sharply, warranting a weaker dollar. But he pointed out that indications that the global recession is deepening could heighten risk aversion and possibly boost the dollar.

"If we do see equity markets coming off sharply and it turns into a global equity markets sell off, then we could well see currencies coming back under pressure against the dollar, so it could actually be a dollar-positive."

At 0841 GMT, the euro was little changed at $1.2760, after inching up to a session high of $1.2795 early in the London session.

Against a basket of currencies, .DXY, the U.S. currency was flat at 86.632, while hovering around 92.18 yen, roughly 0.2 percent lower on the day.

The dollar and the yen have benefited from risk aversion as an increasingly grim global economic outlook has battered stock markets and other asset classes.

This has prompted investors to dump risky positions including those in what were once high-yielding currencies such as the euro, sterling and the Australian and New Zealand dollars, in favour of the U.S. currency and the low-yielding yen.