The dollar came under sharp pressure yesterday, hitting its lowest level in seven months against the German mark on growing expectations that the Federal Reserve Board will cut interest rates to stimulate the sluggish United States economy.European traders returning from a three-day weekend reacted to last Friday's worse-than-expected report on the US employment situation. Economists said the 1,000-job decline in the main October payroll figure continued to underline the fragility of the US recovery. In previous US recessions, job gains averaged 230,000 per month beginning in the fourth quarter. While Washington said the current recovery began at the end of June, employment figures did not reflect an economy picking up steam. More alarming in the October figures was a significant 32,000 decline in employment in the manufacturing sector - one area that had shown some strength in recent months. The figures released only added to a stream of poor US economic data, boosting expectations of an impending cut in the discount rate, currently at 5 percent. Against market expectations, the Fed did not announce a cut in the benchmark rate. Lower US rates would reduce the attractiveness for investors of dollar-denominated investments. The dollar yesterday dropped to 1.6373 German marks and 129.35 Japanese yen from 1.6612 marks and 130.25 yen in European business at the end of last week.

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