(Corrects first bullet point to 1.0 pct from 1.1 pct)
* Japan inflation slowed to 1.0 pct in November
* Japan output fell more-than-expected 8.1 pct in November
* BOJ is expected to further ease policy in Jan-March
* Trade quiet as many Asian and European markets are closed
By Rika Otsuka
TOKYO, Dec 26 (Reuters) - The yen dipped against the dollar and the euro on Friday after data showed Japan's price gains are slowing rapidly, underscoring fears the world's second largest economy could sink back into deflation next year. Government data showed on Friday that annual nationwide core consumer inflation slowed to 1.0 percent in November from 1.9 percent in October.
In a sign of further trouble for an economy already in recession, the ratio of jobs available to those looking for work fell to a nearly five-year low, while industrial production fell a more-than-expected 8.1 percent in November from a month earlier.[JPIP1=ECI
But the yen's losses were limited in thin holiday trade. Financial markets in Australia, New Zealand, and Europe are closed until next week.
Views that the U.S. economy is in even deeper trouble than initially estimated also underpinned the yen against the dollar.
"The yen and the euro are expected to rise against the dollar from now on because dollar is under strong selling pressure," said a forex trader at a U.S. brokerage.
U.S. data on Wednesday showed consumers cut their spending in November for the fifth consecutive month and orders for costly manufactured goods slumped, while the number of workers filing news claims for jobless benefits last week hit a 26-year peak.
The dollar rose to 90.65 yen from around 90.40 yen seen during the previous day's late Asian trade.
The euro was barely changed at $1.4020. Against the yen, the European single currency strengthened to 127.10 yen from around 126.65 yen.
The Bank of Japan last week lowered interest rates close to zero, mirroring steps by the U.S. Federal Reserve, and moved to pump funds into the market to ease a corporate credit crunch.
A Reuters poll showed on Monday that market participants expect to adopt quantitative easing in January-March next year, further easing monetary policy to combat a deepening recession.
Friday's weak Japanese data somewhat supported such market expectations.
"The Bank of Japan may not lower its target rate as it is already near zero. Instead, the central bank is likely to expand measures to help corporations' funding," said Yasuo Yamamoto, senior economist at Mizuho Research Institute. (Reporting by Rika Otsuka; editing by Sophie Hardach)