March 4 (Bloomberg) -- The dollar headed for its first weekly gain in three versus the euro in Asia on expectations a government report will show the U.S. added the most jobs since October.

Releases yesterday showing faster growth in U.S. services industries and falling claims for unemployment benefits fueled optimism the world's biggest economy is adding jobs. The dollar is up 3.4 percent against the euro this year as the U.S. economy speeds up and Europe's stalls. Growth in European services cooled, another release yesterday showed.

``I would be a buyer of dollars heading into the payrolls report,'' said David Mozina, a currency strategist in Sydney at ABN Amro Holding NV. ``People have ramped up expectations for the jobs data,'' he said. ``The U.S. economy continues to defy skeptics and is cruising along at a nice speed, while the news out of the euro zone is quite bleak.''

Against the euro, the dollar traded at $1.3110 at 12:21 p.m. in Tokyo, versus $1.3110 late yesterday in New York, a gain of 1 percent for the week, according to electronic currency-dealing system EBS. The U.S. currency bought 105.38 yen, from 105.29.

The dollar may rise beyond $1.30 per euro today, Mozina said.

U.S. employers probably added 225,000 jobs last month, following a January gain of 146,000, according to the median forecast of 70 economists polled by Bloomberg News. The Labor Department is to release the report at 8:30 a.m. in Washington.

Japan's Rebound

The yen's decline may be limited because of speculation Japan's economy will pull out of last year's recession, luring overseas investors to stocks.

Japan's Nikkei 225 Stock Average headed for its fifth weekly advance in six, after rising to an eight-month high yesterday. Overseas investors were net buyers of Japanese shares for a 19th week during the seven days ended Feb. 25. The yen fell 0.2 percent versus the dollar this week.

``We'll probably see more foreign money moving into Japanese assets, mostly Japanese equities,'' said Michael Preiss, senior investment adviser at Coutts Bank (Schweiz) AG in Singapore. That will ``help the yen rise.''

The euro dropped this week on signs the economy in the 12 countries sharing the currency is stagnating, reinforcing speculation the European Central Bank will keep borrowing costs at a six-decade low.

ECB President Jean-Claude Trichet yesterday said the bank cut its 2005 growth forecast and said a stronger euro is ``unwelcome.''

ECB Cuts Forecast

The ECB cut its growth forecast to about 1.6 percent from 1.9 percent for 2005. The economy expanded 2 percent in 2004. The Federal Reserve raised rates six times since June to 2.5 percent, surpassing the ECB's 2 percent.

``It appears a weaker euro is the ECB's best hope to stimulate exports and the economy,'' said Shimpei Uike, who buys in overseas debt in Tokyo at Asahi Life Asset Management, which runs the equivalent of $10.5 billion. ``Any rally in the euro will stoke a spate of jawboning from policy makers,'' limiting gains.

Service industries in the 12 nations sharing the euro expanded more slowly in February than in the previous month as rising unemployment and increased oil prices crimped consumer spending and investment.

An index yesterday based on a survey of about 2,000 purchasing managers compiled by NTC Research Ltd. for London-based Reuters Group Plc fell to 53 from January's 53.4.

In the U.S., the Institute for Supply Management yesterday said its index of non-manufacturing companies, including retailers and financial services, rose to 59.8 in February from 59.2 the month before. First-time claims for jobless benefits fell by 1,000 to 310,000 last week, approaching a four-year low.

Fed Chairman Alan Greenspan on March 2 told the House Budget Committee that ``the economy is now developing its own momentum.''

To contact the reporter on this story: John Brinsley in Tokyo at jbrinsley@bloomberg.net.

Last Updated: March 3, 2005 22:24 EST