Oil falls towards $66

In the latest signal the economy of the world's biggest energy consumer was still struggling with a deep recession, U.S. employers cut a more-than-expected 467,000 jobs in June and the jobless rate rose to a 26-year high of 9.5 percent.

Euro zone unemployment also rose to 9.5 percent, a 10-year high.

U.S. crude for August delivery fell 36 cents to $66.37 a barrel by 3:41 a.m. British time, its third straight session of losses and putting it on track for a near 4.5 percent decline this week -- the largest since mid-February.

London Brent crude fell 47 cents to $66.18.

"Data from last night were pretty traumatic. We now see the official U.S. unemployment rate at 9.5 percent, which means the real jobless rate could be much higher at 15-16 percent," said Stefano Vincelli, an equities and derivatives broker at Halifax Investment Services in Sydney.

"Also, now that sentiments are getting more bearish, we're again seeing a negative correlation between the U.S. dollar and commodities prices."

The dollar held onto gains made in the wake of the U.S. jobs numbers, hovering near its highest in a week against the euro.

Asian stocks fell on Friday, with Japan's Nikkei average opening down 1.26 percent and Hong Kong's Hang Seng index <.HSI> down 1.9 percent, as the bleak jobs data cast doubt on the speed of an economic recovery.

Oil prices have doubled from a low of $32.40 a barrel in December last year and surged over 42 percent in the last quarter -- the largest quarterly gain since 1990 -- amid a weak dollar and optimism that the global economy would rebound by as early as later this year.