* Hits session low of 99.20 U.S. cents
* Both U.S., Canadian reports below forecasts
* Bank of Canada seen on hold well into 2011 (Updates after U.S. jobs data)
By Claire Sibonney
TORONTO, Dec 3 (Reuters) - The Canadian dollar weakened to a session low on Friday, pulling back from near parity with the U.S. dollar, after starkly disappointing U.S. monthly jobs data undermined the view of accelerating growth in coming months.
U.S. nonfarm payrolls increased far less than expected in November -- up 39,000 versus a consensus of 140,000 -- and the jobless rate jumped to a seven-month high of 9.8 percent, dampening hopes for a self-sustaining economic recovery. [ID:nN02238002]
In the aftermath of the U.S. data, the Canadian dollar CAD=D4 dropped as low as C$1.0081 against the greenback, or 99.20 U.S. cents. Overnight it was only two pips shy of parity at C$1.0002, or 99.98 U.S. cents.
"This number is perceived to undermine the growth story that was unfolding so beautifully in the U.S." said Eric Lascelles, chief Canadian macro strategist at TD Securities.
Lascelles said "whisper numbers" for U.S. payrolls were even higher than published forecasts, with the market talking upside risks.
"It's a bit of a shock to see the number come in this soft and I think we're all going to need to revisit certain assumptions and sort out whether this is a one-off or whether earlier strength was a one-off."
The Canadian currency was already retreating from near one-for-one footing with its U.S. counterpart earlier after domestic employment data showed a mixed performance in November with fewer-than-expected jobs created. [ID:nN03271210]
Both reports do little to change expectations the Bank of Canada will hold its benchmark interest rate steady on Dec. 7 at 1 percent.
"The Bank of Canada would care deeply about both figures and at this point neither argues shriekingly for a hike in the near term," added Lascelles.
At 9:15 a.m. (1415 GMT), the Canadian dollar CAD=D4 stood at C$1.0044 to the U.S. dollar, or 99.56 U.S. cents, slightly lower than Thursday's North American session close at C$1.0039 to the U.S. dollar, or 99.61 U.S. cents.
Canadian government bonds erased earlier losses, rallying alongside Treasuries, as investors flocked to the relative safety of government debt. [US/]
The two-year government of Canada bond CA2YT=RR was up 13 Canadian cents to yield 1.612 percent, while the 10-year bond CA10YT=RR gained 47 Canadian cents to yield 3.144 percent. (Additional reporting by Ka Yan Ng; Editing by Jeffrey Hodgson)