Euro falls, euro zone bond yields rise after U.S. jobs data meets forecasts

LONDON (Reuters) - The euro fell against the dollar on Friday, while European stocks dropped and bond yields rose after data showed the U.S. economy created roughly as many jobs in September as expected, reinforcing expectations for more aggressive rate rises.

Data from the Labor Department showed 263,000 workers were added to non-farm payrolls in September, compared with expectations for a rise of 250,000 and a 315,000 increase in August.

The euro was last down 0.2% at $0.9776, having traded around $0.97965 prior to the data, while the pound was up 0.1% at $1.1173, compared with $1.12085 before the numbers.

Fed fund futures showed investors were betting on the Fed's key rate reaching as high as 4.625% by next March, compared with 4.615% at that same point earlier in the day.

The STOXX-600 index was flat on the day, having traded 0.15% higher before the figures. The banks sub-index, which is the most sensitive to changes in rate expectations, rose 0.3%, paring some of the day's gains.

In euro area government bond markets, Germany's 10-year government bond yield, the benchmark for the euro area, extended gains after the data. It was last up 10 basis points to 2.181%, its highest since Sept. 30.

(Reporting by London Markets Team; Editing by Tommy Reggiori Wilkes)