By Richard Leong
NEW YORK (Reuters) - The dollar rose on Friday on steps taken by China to ease this week's market turbulence and on U.S. jobs gains in December, but the rise was limited by worries over whether Beijing has done enough to calm its battered stock market.
Steep losses across global stock markets this week on fears about further slowing in the world's second-biggest economy have clouded investors' outlook on the greenback and on whether the Federal Reserve has room to raise U.S. interest rates further, if at all, in 2016, analysts said.
"The market's reaction is something between curious and concerning," Richard Scalone, co-head of foreign exchange at TJM Brokerage in Chicago said of the December U.S. payrolls report.
The dollar's rebound from Thursday's drop picked up after data showed U.S. employers added 292,000 workers in December, far above the 200,000 forecast in a Reuters poll.
The gains faded as traders focused on the absence of wage growth last month, which analysts reckoned would cause U.S. inflation to struggle to rise to 2 percent, the Fed's goal.
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"This suggests inflation may be weak in 2016. It would be hard for them to deliver four hikes this year," said Charles St-Arnaud, currency strategist with Nomura Securities in New York.
U.S. interest rates futures implied traders have priced in two rate increases in 2016, half the increases hinted at by Fed Vice Chair Stanley Fischer earlier this week, according to CME Group's FedWatch program.
The dollar index , which measures the greenback against a basket of six currencies, was up 0.3 percent at 98.553, far below the session high of 99.183.
The euro was down 0.3 percent at $1.0895 , paring its weekly gain against the dollar to 0.4 percent.
Against the yen, the greenback clung to a 0.2 percent gain, at 117.87 yen, bringing its weekly loss to 2.2 percent, which was the largest in four months , according to EBS data.
While traders sought to assess the impact of the latest U.S. jobs data on the Fed's rate-hike plan, they remain jittery about China, analysts said.
The yuan, down by up to 3 percent in offshore trading this week , stabilized on reports of outright intervention by Chinese state-owned banks and temporary bans on Chinese banks selling dollars.
The yuan was fixed higher by the People's Bank of China for the first time in nine days on Friday.
Sources told Reuters that PBOC is under growing pressure from policy advisers to let the yuan fall potentially by another 10 to 15 percent.
(Additional reporting by Patrick Graham in London; Editing by Bernadette Baum and Leslie Adler)