TOKYO, JAPAN - THE US dollar fell against the yen in Asian trade on Friday as currency dealers fretted over the US economy, refusing to take a cue from rebounding stock markets.

Most dealers predicted that the dollar would stay under pressure next week unless an emergency Group of 20 summit in Washington takes aggressive action on the global financial crisis.

The US dollar slipped to 97.05 yen in Tokyo morning trade from 97.67 in New York late on Thursday.

The euro softened to US$1.2771 from US$1.2779 and eased to 123.98 yen from 124.84.

Stock markets in Tokyo and elsewhere in the region soared in early trade following an overnight rally on Wall Street as bargain hunters tried to profit from what they believed were underpriced equities, dealers said.

'There was no logical reason as to why shares rose, and worries remain over how the US will handle the financial crisis', said Mr Yosuke Hosokawa, chief forex strategist at Chuo Mitsui Trust Bank.

Dealers said the dollar could get a boost if leaders of the world's 20 largest economies hammer out a coordinated fiscal stimulus plan at Saturday's emergency summit in Washington.

But for now, a raft of gloomy corporate news and economic data clouded over the greenback.

The US unemployment rate in October rose to 6.5 per cent, its highest level since 1994.

Some 516,000 people in the United States newly reported last week that they lost their jobs, an unexpectedly high figure and the worst since the aftermath of the September 11, 2001 attacks.

Meanwhile both US imports and exports were down sharply in September, signalling growing weakness in the US and global economy despite a narrowing of the US trade deficit.

The data along with the OECD's downgrading of growth forecasts for developed economies 'is certainly turning up the heat for a significant policy response' at the Washington summit, wrote NAB Capital strategists in a note to clients.

But dealers said it would be difficult for so many leaders to come up with concrete measures in such a short time.

'If the only thing countries agree on is the recognition of the crisis, we may see more market turmoil next week', said Mr Hosokawa of Chuo Mitsui.

Mr Daisuke Uno, chief strategist at Sumitomo Mitsui Banking Corp, also predicted more market turbulence if the summit achieves little.

'At the summit, each country will likely look inwards and discuss from the standpoint of protecting its own national interests. That means that a prescription to curb the financial crisis is unlikely to be drawn up', Mr Uno said. -- AFP