TOKYO  - The euro extended its losses in Asia Friday after a weak set of inflation data raised fears the debt-wracked eurozone could sink into a deflationary spiral.

The single currency bought $1.3551 and 132.66 yen in Tokyo trade, against $1.3579 and 133.60 yen in New York, and sharply lower than the $1.3708 and 134.85 yen late in Asia Thursday.

The dollar slipped to 97.92 yen Friday from 98.37 yen as risk aversion grew with stock prices falling.

Traders dumped the single currency on Thursday after the European Union statistics agency Eurostat showed inflation across the 17-country eurozone fell sharply in October to 0.7 percent, the lowest level in nearly four years.

The figure was well below the European Central Bank's target of two percent, and raises concerns the region could be in for a period of deflation, putting pressure on policymakers to lower interest rates even further.

"Data has been in the driving seat overnight, in particular the unexpectedly sharp drop in eurozone inflation data," National Australia Bank (NAB) said in a note.

The weak data spawned speculation that the ECB would soon lower interest rates to prop up the economy, a senior dealer at a Japanese bank told Dow Jones Newswires. Lower interest rates generally hit a region's currencies as investors seek out other assets for better returns.

The Australian bank said the data "brings next week's ECB Council meeting into sharp relief".

While NAB does not anticipate a cut in the ECB's key rate from an already record low of 0.50 percent, "there seems certain to be a lively discussion", it said.

The dollar was mostly higher against other Asia-Pacific currencies.

It rose to 61.82 Indian rupees from 61.36 rupees the previous day, to Tw$29.41 from Tw$29.39 and to Sg$1.2425 from Sg$1.2390.

It also strengthened to 1,061.88 South Korean won from 1,059.83 won, to 11,340 Indonesian rupiah from 11,293 rupiah and to 31.19 Thai baht from 31.08 baht. It edged lower to 43.21 Philippine pesos from 43.29 pesos.

The Australian dollar slipped to 94.75 US cents from 94.89 cents, and the Chinese yuan fetched 16.04 yen from 16.14 yen.