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* C$ up at C$0.9980 vs US$, or $1.0020 * U.S. jobs data eases concerns about outlook * Bond prices drift lower across curve By Jennifer Kwan TORONTO, May 10 (Reuters) - Canada's dollar rose against its U.S. counterpart on Thursday, pausing from a sharp selloff in the previous session as U.S. jobs data allayed some concerns of a slowing economic recovery. New U.S. claims for unemployment benefits edged down last week, according to government data on Thursday, that could ease concerns the labor market was deteriorating after April's weak employment growth. "Even the tiny improvement in initial jobless claims is encouraging especially given the mediocre employment report we saw for the U.S. in April," said Doug Porter, deputy chief economist at BMO Capital Markets. " There was a sense that the U.S. economy was struggling again and to see any improvement in the jobs front is a check mark in the plus column." Also encouraging was U.S. import data that suggested consumer spending was "rolling along," added Porter. At 9:20 a.m. (1320 GMT), the Canadian currency stood at C$0.9980 versus the U.S. dollar, or $1.0020, up from Wednesday's finish at C$1.0009 against the U.S. dollar, or 99.91 U.S. cents. Porter noted the currency largely ignored Canadian trade data that showed the country's trade surplus rose in March from February as imports declined at a greater rate than exports, Statistics Canada said on Thursday. The trend for the Canadian currency had already been on the stronger side, shrugging off weak Chinese trade data that stoked fears of slower growth and undermined global risk appetite as European leaders struggled to contain a worsening debt crisis. The currency outperformed most of its G10 currency cousins including the euro, U.S. dollar and Japanese yen, but underperformed the New Zealand and Australian dollars. Still, many traders were expected to huddle on the sidelines ahead of Canada's monthly employment report on Friday. "In the case of Canada, it's more tomorrow's employment data that is critical rather than today's data to the extent that probably is ... one of the more important determinants of the Bank of Canada executing the tightening bias that it now carries," said Adam Cole, global head of FX strategy at RBC Capital Markets in London. "So the fact that the Bank of Canada put that tightening bias in place at the last meeting does throw the spotlight a bit more onto the domestic indicators than it has been in recent months." Canada will be fortunate if it registered much of an employment increase in April after March's outsized gain of 82,300 jobs, according to a Reuters poll of analysts. Data out on May 11 is forecast to show a much smaller 7,000 gain, and the unemployment rate edging back up a tick to 7.3 percent, after having fallen in March to 7.2 percent from 7.4 percent. (ID:nL1E8G4LBK) On Wednesday, Canada's dollar slid to its lowest in three-and-half months, back below parity against the U.S. dollar over fears about the health of Spanish banks and a political impasse in Greece. Cole said the parity level is providing some support for the U.S. dollar against Canada's. "You would want to see a close below that level to be convinced that it was sustainably breaking below that level," he said. "But otherwise I think quite narrow ranges ahead of the (employment) numbers tomorrow unless you get a large move in risk appetite one way or the other which is enough to carry CAD." Canadian bond prices drifted lower across the curve, with Canada's 2-year bond down 9 Canadian cents to yield 1.272 percent, while the benchmark 10-year bond lost 34 Canadian cents to yield 2.021 percent.