* Dollar rises vs euro, falls vs yen after jobs data
* ECB holds rates at 1.0 percent as expected
* China quells FX reserves speculation, supports dollar
(Adds comments, details)
By Vivianne Rodrigues
NEW YORK, July 2 (Reuters) - The dollar extended gains versus the euro and fell against the yen on Thursday after a report showed a larger-than-expected drop in U.S. non-farm payrolls in June, raising concerns about the pace of the economic recovery.
U.S. Treasury bonds rose and U.S. stock index futures extended losses after the data as risk aversion increased, helping the dollar's safe-haven appeal. Analysts said demand for the euro also fell after European Central Bank President Jean-Claude Trichet said euro-zone activity would likely remain weak for the rest of the year.
The ECB left interest rates at 1 percent as expected, and Trichet said stabilization in 2010 would be followed by a recovery.
"Certainly the (jobs) number is weaker-than-expected," said Vassili Serebriakov, a currency strategist at Wells Fargo Bank in New York. "The dollar was trading with a slightly firmer tone going into the number primarily due to weaker equity markets and data disappointments elsewhere."
"Eventually it'll depend on equities," he added. "If equities were to take this number badly, this could lend some strength to the dollar."
In morning trading in New York, the euro was down 0.7 percent at $1.4044, retreating from $1.4201 hit on Wednesday, its highest since early June. The dollar was down 0.6 percent at 95.99 yen, after trading as high as 96.88 yen prior to the jobs report.
U.S. employers cut 467,000 jobs in June, far more than expected, while the unemployment rate rose to 9.5 percent, the government said in a report that showed a labor market continuing to struggle with a deep recession.
"If you were banking on the U.S. driving a vigorous recovery, think again. The employment report can largely be taken at face value, and the face value story is a labor market that is not improving nearly as rapidly as the May data suggested," Alan Ruskin, chief international strategist at RBS, said in a note.
Also helping to support the dollar were comments from a Chinese Foreign Ministry official that weakened speculation about currency reserves diversification.
The U.S. currency fell on Wednesday after G8 sources told Reuters China had asked for a debate on proposals for a new global reserve currency.
"The dollar has been a little bit underpinned by the Chinese policymakers taking back their rhetoric about the global reserve currency," Samarjit Shankar, director of global foreign exchange strategy at the Bank of New York Mellon in Boston. (Additional reporting by Steven Johnson and Wanfeng Zhou in New York; Editing by Kenneth Barry)