LONDON, Sept 8 (Reuters) - The dollar remained mired near its lowest levels since early 2015 as European Central Bank President Mario Draghi's suggestion that it may begin tapering its massive stimulus programme this autumn continued to underpin the euro.
Meanwhile expectations of another interest rate hike in the U.S. this year have come off as stubbornly weak low inflation continues to surprise Federal Reserve policymakers.
Moreover, an agreement to push U.S. debt ceiling talks three months down the road to December, coinciding with the Fed's policy meeting, have also cut chances of another rate hike.
In Europe, the euro rose to a fresh 2-1/2 year high on Friday as currency bulls judged the central bank's concerns about the strengthening currency at Thursday's policy meeting as lukewarm at best.
At the same time euro zone government bond yields were set on Friday for their biggest weekly falls in at least a month, after the ECB signalled a slow exit from its hefty bond-buying stimulus scheme.
"We think the ECB would be concerned about currency strength if that occurred at the same time as higher bond yields," said analysts at Morgan Stanley, led by Hans Redeker, while reiterating their bullish view on the euro.
European stocks were off 0.3 percent as the stronger euro -- a hit to exporters' profits -- continued to take the shine off one of the most favoured trades from earlier this year. Europe's main benchmark is now down more than 6 percent from its May highs.
Market participants' focus was also increasingly shifting to a series of natural disasters hitting the Americas' coasts and worries that Pyongyang could launch another missile test on Saturday, North Korea's founding day, which kept risk appetite in check going into the weekend.
U.S. stock futures were down 0.3 percent.
Investors continued to track Hurricane Irma, which was bearing down on Florida even as Texas struggles with the devastation caused by Hurricane Harvey which economists have said could weigh on U.S. economic growth for the third quarter.
An earthquake of magnitude 8.1 struck off the southern coast of Mexico late on Thursday, the U.S. Geological Survey (USGS) said, killing at least five people, triggering small tsunami waves and damaging some buildings.
Oil markets were mixed on Friday, with Brent crude supported by expectations that Saudi Arabia could cut its October supplies, while U.S. crude was weighed down by refinery outages due to damage from Hurricane Harvey, which dented demand.
Brent crude futures were up 8 cents at $54.57 a barrel, with the benchmark for international oil prices earlier marking its highest since April at $54.79 a barrel.
U.S. West Texas Intermediate (WTI) crude futures were at $48.98 barrel, 11 cents below their last settlement.
(Reporting by Vikram Subhedar; Editing by Matthew Mpoke Bigg)