By Richard Hubbard

London - The dollar fell and US stock futures lost ground after a smaller than expected rise in nonfarm payrolls for August on Friday dented a rally in risk assets that followed the European Central Bank's new plan to tackle the region's debt crisis.

Nonfarm payrolls increased by 96,000 in August, compared with forecasts for 125,000 new jobs, while the unemployment rate dropped to 8.1 percent from 8.3 percent in July, raising expectations that the US Federal Reserve might be pushed into easing monetary policy.

The greenback fell to 80.48 against a basket of major currencies from around 80.7 immediately before the data emerged, and reached a four-month low against the euro, which was up over 1.1 percent at around $1.2767.

“Today's report suggests that the economy isn't strengthening so certainly builds the case for QE (monetary easing,” said James Knightley, senior economist at ING.

The futures market pointed to a mixed start on Wall Street after the data, with S&P 500 index futures up 1.3 points, the Dow Jones industrial average futures flat and Nasdaq 100 futures down 1.75 points.

The benchmark 10-year Treasury note was up 16/32 after the jobs numbers, its yield easing to 1.63 percent from 1.69 percent late on Thursday and 1.73 percent on Friday before the report was released.

The FTSEurofirst 300 equity index slipped to 1,107.80 points, up 0.3 percent on the day but down from gains of 0.5 percent before the data was published.

European stocks had made strong gains after the ECB unveiled a new plan for potentially unlimited bond buying, which it hopes will lower the borrowing costs for heavily indebted nations like Spain and Italy and ease fears over the future of the euro. - Reuters