MUMBAI: The Indian rupee extended losses to fresh three-week lows on Friday afternoon tracking sharp losses in domestic shares with traders awaiting the U.S. non-farm payrolls data due at 1230 GMT for further direction. * At 2:20 p.m., the partially convertible rupee was at 45.44/45 per dollar, after touching 45.46, its weakest since Dec. 20 and below its close of 45.245/255 on Thursday. * The euro dropped to a four-month low versus a broadly firmer dollar on Friday ahead of U.S. jobs data, which is expected to provide more evidence of a stronger U.S. economic recovery. * The index of the dollar against six major currencies was up 0.3 percent at 81.021 points. * Indian shares were down 1.7 percent weighed down by concerns of interest rate increases to rein in accelerating inflation and little direction from mixed Asian markets. * India's food price index rose 18.32 percent in the 12 months to Dec. 25, its highest in more than a year, data on Thursday showed. The fuel price index climbed 11.63 percent. * The Reserve Bank of India is expected to raise interest rates by atleast 25 basis points on Jan. 25, when it reviews policy, a Reuters poll showed on Wednesday. Analysts forecast rates to rise by 75 basis points in 2011. * One-month offshore non-deliverable forward contracts were quoted at 45.73, weaker than the onshore spot rate. * In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange and MCX-SX were both at 45.6050, with the total traded volume on the two exchanges at about $3.4 billion.

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