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* C$ hits highest point since May 2008
* Bonds sink across the curve
* Canada adds 69,200 jobs vs forecast of 15,000 gain
* U.S. payrolls up meager 36,000 (Adds details)
By Ka Yan Ng
TORONTO, Feb 4 (Reuters) - The Canadian dollar hit its highest level against the U.S. dollar since May 2008 on Friday, while bond prices held lower after a U.S. government report showed employment rose far less than expected in January.
Stronger-than-expected Canadian job gains for January underpinned the Canadian dollar's climb to as high as C$0.9832 to the U.S. dollar, or $1.0171.
At 9:27 a.m. (1427 GMT), the currency CAD=D4 was at C$0.9856 to the U.S. dollar, or $1.0146, still firmer than Thursday's North American session close at C$0.9910 to the U.S. dollar, or $1.0091.
U.S. employment rose by a meager 36,000 jobs in January, far less than the 145,000 increase the market had expected, but the unemployment rate fell to its lowest level since April 2009.
The modest U.S. jobs gain was at odds with other data for January, which had suggested employment growth was picking up, but severe snow storms that slammed large parts of the nation may be partially to blame for the weak figure. [ID:nLLA4DE7BA]
"It was a fairly soft U.S. report but I think a lot of people are trying to look through it on the back of weather-related issues," said Camilla Sutton, chief currency strategist at Scotia Capital.
She said the weak U.S. headline figure did not have a deep impact on the U.S. dollar, which allowed the Canadian dollar to strengthen on the back of Canada's own set of jobs data and outperform all the other major currencies.
Canada added 69,200 jobs in January, more than quadruple the forecast of a 15,000 gain. The unemployment rate edged up to 7.8 percent from 7.6 percent in December as more people sought work, according to Statistics Canada data. [ID:nSCL4DE790]
Both sets of jobs figures kept Canadian bond prices in negative territory, as economic recovery hopes have recently gained more traction.
In particular, the short-dated interest-rate sensitive front end was steeply lower on the notion that the Bank of Canada may start raising interest rates sooner than expected.
"I find the Bank of Canada doesn't tend to overreact much to one month's job figures," said Doug Porter, deputy chief economist at BMO Capital Markets. "They'll certainly take note of this but they'll also note the point that the unemployment rate backed up by a couple tenths of a percent. So it wasn't a completely one-sided show of force"
"As a stand-alone report there's no question about it, it's very supportive for the currency."
The two-year bond CA2YT=RR was 14 Canadian cents lower to yield 1.842 percent, while the 10-year bond CA10YT=RR dropped 30 Canadian cents to yield 3.462 percent. (Additional reporting by Pav Jordan; editing by Peter Galloway)