The dollar, hurt by troubling unemployment figures and rumors of interest rate reductions, plunged Friday against most foreign currencies.

"The dollar has gone one way - down," said Markku Anttila, chief dealer at Kansallis Osake Pankki, a Finnish bank.After the government said August's U.S. jobless rate had remained at 6.8 percent, the dollar - which had been waiting all week for this number - fell hard. Weak unemployment may force the Federal Reserve to lower interest rates, making the dollar less attractive.

After the initial plunge, the dollar managed to rally somewhat, but then faltered and again headed down.

"The shorts that had been placed earlier had covered," said Alfonso Alejo, assistant vice president for corporate foreign exchange at Mitsui Bank.

In a short sale, the trader sells currencies he does not own in hopes of buying them back later at a lower price. When the shorts cover, or buy back the currency, that tends to push the currency back up.

"The overwhelmingly poor technical condition of the market resumed and the dollar sharply declined," Alejo said.

In late New York trading, the dollar fell to 1.7175 marks, down from 1.7390 Thursday and to 135.819 Japanese yen from 135.850 Thursday.

Sterling rose to $1.7199 from $1.6945 Thursday.

The dollar fell in New York to 1.5057 Swiss francs from 1.5265 Thursday and dropped to 5.8350 French francs, down from 5.9060 and to 1, 282 lira from 1,297 Thursday.

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The market also jumped to rumors about the Fed cutting the discount rate, which is charged on direct loans from the Fed's discount window to banks in need of a special cash infusion. Most banks do not like to turn to the Fed, so the rate, now at 5.5 percent, is mostly a credit bellwether.

Tom Moore, an analyst at American Express Bank, said, "Rumors are running about a discount rate cut. Nobody believes it, but some people got burnt a few weeks ago and they're not taking a chance now."

Earlier on European markets, the dollar also dropped.

On the metals markets, gold and silver were higher.

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