Dollar keeps most gains as fear drives trading amid Europe’s woes, stock market volatility

Dollar holds most gains as fear drives trading

NEW YORK — The dollar slipped Friday but held onto most of the week’s gains as investors sought safety amid the swirling debt crisis in Europe and volatility on stock markets.

The U.S. government also said Friday that employers added 290,000 jobs in April, the biggest amount since March 2006. The report is more evidence that the U.S. economy is steadily improving, which will support the dollar in the long run as the Federal Reserve eventually moves to raise interest rates.

In late trading in New York, the euro rebounded to $1.2731 from 1.2602 late Thursday. It is still down more than 4 percent for the week, the steepest drop since October 2008, the height of the financial crisis. It had sunk as far as $1.2523 on Thursday, a 14-month low, as traders remained unconvinced of the effectiveness of European leaders’ moves to keep the debt crisis from spreading throughout Europe.

Traders have been selling the euro on fears that aid may eventually also be needed for Portugal and Spain to keep them from defaulting as bonds come due, borrowing costs remain high and their economies stagnate or decline.

The British pound also dropped to a 13-month low Friday at $1.4478 after a general election resulted in a parliament with no majority. Investors worry that a power vacuum will mean no plan to deal with Britain’s growing debts and its weak recovery from recession.

The pound recovered somewhat to end higher, reaching $1.4808 in late trade after the Conservatives, who won the most votes, asked the center-left Liberal Democrats to form a government. On Thursday, the pound was worth $1.4786. It fell 3 percent this week.

In other trading, the dollar rose to 91.35 Japanese yen from 89.10 yen, but slipped to 1.1090 Swiss francs from 1.1119 francs. It also dropped to 1.0433 Canadian dollars from 1.0617 Canadian dollars.

Just last week, the dollar was worth less than the Canadian dollar. It zoomed higher as traders sought safety in the U.S. currency as well as Treasurys as stocks and commodities dropped.

On Thursday, the Dow Jones industrial average briefly plunged nearly 1,000 points in afternoon trading before recovering about two-thirds by the end of the day. In late trading Friday, the Dow Jones industrials had lost another 1.6 percent.