CANADA FX DEBT-Canadian dollar pares weekly decline after bumper jobs gain

By Fergal Smith

TORONTO, Oct 10 (Reuters) - The Canadian dollar rose against its U.S. counterpart on Friday as stronger-than-expected domestic jobs data reduced bets on another Bank of Canada interest rate cut this month, but the move was limited as oil prices fell.

The loonie CAD= was trading 0.1% higher at 1.40 per U.S. dollar, or 71.43 U.S. cents, after touching its weakest level since April 10 at 1.4034. For the week, the currency was down 0.4%, its third straight weekly loss.

Canada's economy added 60,400 jobs in September, almost entirely reversing losses of the previous month, while the unemployment rate held steady at 7.1%. Economists had forecast a 5,000 jobs gain.

"Overall, we would definitely characterize this as a solid and encouraging report," said Doug Porter, chief economist at BMO Capital Markets. "We've been leaning to a hold in late October. This somewhat helps that story but it's a close call."

Investors see a roughly 50% chance the BoC lowers interest rates at its next policy decision on October 29, down from 72% before the data. 0#CADIRPR

The central bank eased its benchmark rate by a quarter of a percentage point last month to 2.50%, its first cut since March, supporting an economy buffeted by trade uncertainty.

The price of oil CLc1, one of Canada's major exports, settled 4.2% lower at $58.90 a barrel as confidence grew that the Gaza peace agreement between Israel and Hamas was taking hold.

Canadian government bond yields eased across a flatter curve as Wall Street sold off sharply on increased trade tensions between the U.S. and China .

The 10-year CA10YT=RR was down 4.3 basis points at 3.169%, while the gap between it and the U.S. equivalent narrowed by 5.9 basis points to about 88 basis points in favor of the U.S. note .

That was the smallest gap since September 16. The bond market closed early ahead of the Thanksgiving Day holiday on Monday.