Asian stocks fell and the euro slipped to a three-week low against the dollar on Monday as fears of renewed recession in the United States and sustained worries about the euro zone debt crisis prompted investors to sell riskier assets.

European stocks were expected to drop too, with financial bookmakers calling the major indexes down more than 1 percent. <.L> <.EU>

U.S. employment data on Friday showed the world's biggest economy failed to create any jobs last month for the first time in nearly a year.

Even if you take out the effect from the Verizon strike, it is still a lousy number and people are concerned that growth is not there any more, said Dominic Schnider, head of commodity research of UBS Wealth Management in Singapore.

Europe, meanwhile, faces a string of political and legal tests this week that could hurt efforts to resolve its sovereign debt crisis and increase pressure on governments to try more radical solutions.

In this atmosphere, foreign investors are likely to remain risk-averse and inactive, said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management Co in Tokyo.

Demand for safer assets drove up Japanese government bonds, while the yen firmed a touch and gold lost only a little ground after spiking on Friday.

Tokyo's Nikkei share average <.N225> fell 2 percent, while MSCI's broadest index of Asia Pacific shares outside Japan <.MIAPJ0000PUS> fell 2.6 percent, leaving it more than 17 percent below its April high. <.T>

Energy and materials -- both sensitive to expectations of industrial demand -- were the hardest hit sectors in the MSCI index, shedding between 3 and 4 percent.

OBAMA SPEECH

Stocks on Wall Street and other major exchanges closed down more than 2 percent on Friday after the U.S. Labor Department report, which also sparked a rally in safe haven investments such as gold, Treasuries and the Swiss franc.

U.S. S&P stock futures fell 0.6 percent in Asia, extending Friday's weakness, although Wall Street is closed on Monday for the Labor Day holiday and investors are looking ahead to a speech to Congress by President Barack Obama on Thursday for details on how he plans to boost the economy.

Some don't expect much in the way of concrete measures from Obama. There won't be any magic rebound, said Fumiyuki Nakanishi, strategist at SMBC Friend Securities in Tokyo.

The worsening outlook also piles pressure on the U.S. Federal Reserve to embark on a third round of money creation via bond purchases, known as quantitative easing, which could cheapen the dollar and encourage buying of riskier assets.

A year ago a signal from Fed Chairman Ben Bernanke that a second bout of quantitative easing, dubbed QE2, was in the pipeline triggered a rally that saw the S&P 500 rise about 30 percent from August to May, although some analysts are doubtful that any QE3 program would have a similar effect and the central bank itself appears more reluctant.

This is likely to bring further calls for quantitative easing, despite the Fed's apparent aversion, said CMC Markets market strategist Michael McCarthy in a research note.

EURO WOE

In currency markets, the euro hit its lowest level in three weeks against the dollar while currencies affected by expected demand for commodities, such as the Australian dollar, also came under pressure.

A court ruling in Germany on Wednesday may limit the ability of the euro zone's biggest economy to finance rescues of crisis-hit countries such as Greece.

Concerns about high debt in Europe has resurfaced, and those poor payrolls results certainly got people worried about the U.S. economy and the global economy as well, said Joseph Capurso, strategist at Commonwealth Bank in Sydney.

The euro eased to $1.4138, reaching lows not seen since August 11. It was later trading around $1.4165, down from $1.4198 late in New York on Friday. This helped drive the dollar index <.DXY> back to one-month highs.

The yen firmed slightly to around 76.76 per dollar.

Japanese government bond September 10-year futures rose 0.46 point to 142.72, while the benchmark 10-year yield fell 4 basis points to 1.020 percent.

Gold held most of its gains, inching down around 0.4 percent to about $1,876 an ounce after jumping more than 3 percent on Friday.

Oil eased on concerns that a double dip recession would slow demand, with Brent crude falling 0.8 percent to $111.49 a barrel while U.S. crude eased around 0.9 percent to $85.65 a barrel.

(Additional reporting by Vikram Subhedar in Hong Kong, Ian Chua in Sydney and Lisa Twaronite in Tokyo; Editing by Kim Coghill and Ramya Venugopal)

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