* U.S. Sept job losses raise doubts about recovery
* Unemployment rises to 9.8 percent
* Weak U.S. data could weigh on dollar in long run (Recasts, updates prices, adds comment, U.S. data)
By Gertrude Chavez-Dreyfuss
NEW YORK, Oct 2 (Reuters) - The dollar dropped against major currencies on Friday after an anemic September jobs data fueled fears that the pace of a U.S. economic recovery would be slow.
Investors initially bought the dollar versus the euro after the release of the jobs data in a flight-to-safety bid. But dollar gains were modest, and analysts suggested caution in buying the U.S. currency amid signs the recovery could stall.
Job losses last month reached 263,000, far above expectations, with the unemployment rate rising to 9.8 percent, as expected.
"The number is going to put a real crimp on anticipation of a strong recovery," said Joseph Trevisani, senior market analyst at FX Solutions in Saddle River, New Jersey. "The number of job losses are moving in the wrong direction, and the stock market and the dollar are not going to take comfort from this."
In midmorning trading, the euro surged to session highs against the dollar to $1.4642 after falling to Friday lows after the jobs data was released. It was last at $1.4620, up 0.6 percent.
The dollar fell 0.8 percent against the yen to 88.80.
The ICE Futures dollar index dropped 0.4 percent to 76.902.
The U.S. currency, however, was supported against high-yielding "commodity" currencies, including the Australian, Canadian and New Zealand dollars, which were hit by a 1.8 percent slide in European shares.
The Australian dollar fell 0.5 percent to US$0.8658, while the New Zealand currency was down 0.2 percent to US$0.7167.
The dollar mainly benefited from weakness in global equity and commodity markets after soft U.S. jobless and manufacturing data on Thursday renewed global recovery concerns. That triggered profit-taking in those assets and higher-yielding currencies.