FOREX-Yen rise after disappointing U.S. jobs report

* Weak U.S. payrolls data lifts yen, risk aversion rises

* US Oct payrolls fall 190,000, jobless rate 10.2 pct

* Traders reduce bets of Fed raising interest rates

* Investors also keep an eye on G20 meeting (Adds details, updates prices)

NEW YORK, Nov 6 (Reuters) - The yen rose against the dollar and euro on Friday after a disappointing U.S. jobs report stoked worries about the state of the economy and boosted safe-haven demand for the Japanese currency.

U.S. employers cut a deeper-than-expected 190,000 jobs in October, driving the unemployment rate up to its highest in 26-1/2 years at 10.2 percent. For details, see [ID:nN04495174].

The government data dashed hopes the recession was ending after recent gross domestic product and jobless claims readings pointed to an economic recovery.

"Job losses are not moderating as quickly as I had hoped despite those earlier indicators on jobs," said Richard Franulovich, senior currency strategist at Westpac in New York. "It's pretty disappointing overall and that's why we're seeing ... dollar/yen fall."

The dollar fell as low as 89.69 yen, according to Reuters data, and last traded 0.9 percent lower at 89.94 yen . The euro declined 0.7 percent to 134.14 yen .

The euro recovered against the dollar to trade 0.2 percent higher at $1.4907 , well off a session low at $1.4815 as U.S. stocks rebounded.

For much of the past year, the euro has had a positive correlation with moves in the stock market, gaining when rising share prices boost risk appetite.

The jobs data raised expectations the Federal Reserve will stick to its near zero rate policy well into 2010 to boost the economy.

Traders reduced their bets the Fed will begin raising rates in the middle of next year. The implied chances of the Fed's first rate hike by the mid-2010 slipped to about 66 percent from 84 percent late on Thursday. [ID:nNYE002745].

"The real shocker is the unemployment rate," said Joseph Trevisani, senior market analyst at FX Solutions in Saddle River, New Jersey. "The Fed will stay on hold even longer with less likelihood of giving a concrete answer as to when and how to withdraw quantitative easing."

The Federal Reserve on Wednesday held borrowing costs near zero percent and kept its commitment to low rates for an "extended period."

Traders will also keep an eye on the Group of 20 finance ministers and central bankers who meet in Scotland on Friday and Saturday, although discussions on currencies are not on the formal agenda.

UK finance minister and G20 chair Alistair Darling told Reuters in an interview that G20 policymakers are agreed that it is too early to pull the plug on economic life-support packages as the global recovery is still fragile. [ID:nLAG005901] (Additional reporting by Nick Olivari and Gertrude Chavez-Dreyfuss) (Editing by Theodore d'Afflisio)