RPT-FOREX-Dollar falls for 1st time in seven sessions vs euro

* Dollar falls on weaker-than-expected August payrolls

* U.S. economy loses 84,000 jobs in August

* Jobless rate highest since matching 6.1 pct in Sept 2003 (Repeats with no changes to text) (Updates prices, adds details, byline)

By Wanfeng Zhou

NEW YORK, Sept 5 (Reuters) - The U.S. dollar fell against the euro for the first time in seven sessions on Friday after a government report showed the U.S. economy lost more jobs than expected last month and the unemployment rate jumped.

The weaker-than-expected payrolls data heightened fears over the U.S. labor market and the general health of the world's largest economy, eroding some support for the greenback.

The dollar has rallied sharply against the euro in the past month or so on expectations that the U.S. economy would outperform those of Europe and Asia.

"Very ugly across the board," said Boris Schlossberg, head of currency research at GFT Forex, New York, of the payroll figures.

"The most startling thing for the market was this huge jump in the unemployment rate," he said. "The jobless rate suggests that the climate for job expansion has become much more difficult and suggests we are probably going to have a much harder fourth quarter facing us."

In early New York trading, the euro was up 0.5 percent at $1.4316 <EUR=> having traded at its lowest since October at $1.4197, according to Reuters data.

The U.S. Dollar index, which tracks the value of the greenback against a basket of six currencies, fell 0.5 to 78.525 .DXY.

The Labor Department said 84,000 jobs were lost in August, significantly higher than the economists' forecast of 75,000. In addition, July's job losses were revised up to 60,000 and June's to 100,000 from a previously reported 51,000 in each month.

The U.S. unemployment rate unexpectedly shot up to 6.1 percent in August, as employers cut payrolls for an eighth straight month and labor markets showed signs of accelerating decline.

Ashraf Laidi, chief FX strategist at CMC Markets U.S., said the negative impact of August payrolls report on the dollar is unlikely to be sustained.

"The recent greenback strength is not a result of improved U.S. fundamentals but of worsening conditions abroad," he said in a note, and the jobs report did not change that.  Continued...