July 9 (Bloomberg) -- The dollar headed for second week of losses against the euro in Asia after the U.S. warned that al- Qaeda may attempt terrorist attacks and as analysts scaled back estimates for growth in the world's largest economy.

Homeland Security Secretary Tom Ridge said the risk of attacks has ``increased'' ahead of the Nov. 2 presidential election. The dollar's prospects have dimmed since a report on July 2 showed U.S. employers added fewer than half the jobs economists forecast in June, reducing expectations for the pace of interest-rate increases by the Federal Reserve.

``The U.S. dollar has been on its back foot since the payrolls'' report, said Greg Gibbs, currency strategist in Sydney at RBC Capital Markets. ``Some of the numbers have been a bit weak in the U.S.'' The threat of terrorist action ``doesn't help.''

Against the euro, the dollar was trading at $1.2396 at 8:33 in Tokyo, from $1.2386 late yesterday, according to EBS, an electronic currency-trading system. The U.S. currency yesterday traded as low as $1.2406, its weakest since March 22, and is down 0.6 percent on the week.

The yen headed for a losing week on concern slower growth in China will hurt Japanese exports and on speculation Japan's ruling Liberal Democratic Party will lose seats in a parliamentary election this weekend.

Evenly Divided

Voters are almost evenly divided in their preferences for Prime Minister Junichiro Koizumi's LDP and the opposition Democratic Party of Japan in advance of the Sunday upper house parliamentary election, the Asahi newspaper said, citing a poll taken on Tuesday and Wednesday.

Koizumi's party may fail to win all of the 51 seats it's defending, polls run by Japan's four biggest newspapers earlier this week showed. Such a result may force Koizumi to step down and would hamper his ability to curb spending, sell off state assets and implement other economic policies. There are 121 upper house seats being contested of the 242 in the chamber.

The yen was at 108.85 per dollar, from 109.01, down 0.5 percent on the week.

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