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* C$ hits session low of C$0.9970 vs US$, $1.0030 * Canada's economy unexpectedly lost 30,400 jobs in July * Bonds higher across curve By Jennifer Kwan TORONTO, Aug 10 (Reuters) - The Canadian dollar touched a session low against its U.S. counterpart on Friday as an unexpectedly weak domestic data report for July suggested the Bank of Canada will stay on the sidelines for longer. The Canadian currency sank to C$0.9970 against the U.S. dollar, or $1.0030, from about C$0.9948 just before the data's release. Canada's economy unexpectedly lost 30,400 jobs in July in a third disappointing month for the labor market with growth failing to gain momentum. "The data will be negative for the Canadian dollar today, and should support a rally in short-term bonds as markets price-down the odds of the Bank of Canada hiking rates any time soon," said Avery Shenfeld, chief economist at CIBC World Markets. Canadian short-term bond prices firmed after the data with the two-year bond up 11 Canadian cents to yield 1.107 percent. As well, overnight index swaps, which trade based on expectations for the central bank's key policy rate, showed that traders slightly decreased the already modest probability of a rate increase in December after the data. Camilla Sutton, chief currency strategist at Scotiabank, said the report follows a string of disappointing releases. "I don't think the market ever fully believed in the Bank of Canada's fairly hawkish tone, but it certainly dampens expectations for rate hikes in Canada," said Sutton. At 8:45 a.m. (1245 GMT), the currency was at C$0.9968, or $1.0032, down from its North American finish at C$0.9920 versus the U.S. currency, or $1.0081. The employment report showed net job losses resulted from the elimination of 51,600 part-time positions, which overshadowed the 21,300 full-time jobs created, according to Statistics Canada data on Friday. There was little change in both public and private sector employment. The jobless rate climbed to 7.3 percent from 7.2 percent, with the biggest layoffs in wholesale and retail trade and in professional, scientific and technical services. The market had expected some 9,000 jobs to be created in July after mediocre gains of 7,300 in June and 7,700 in May. The currency had already been weighed down by broader market sentiment. Poor Chinese trade data clipped a hot streak for European shares and the euro on Friday, trimming gains built since the European Central Bank signaled it was readying plans to combat the region's debt woes and limp growth.