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* Canadian dollar rebounds from disappointing jobs data
* 70,600 Canadian jobs lost in November, most in 26 years
* Bonds slump as stocks make late-day jump
* Bank of Canada in focus, seen slashing rates on Tuesday
By Ka Yan Ng
TORONTO, Dec 5 (Reuters) - The Canadian dollar clawed back from a six-week low versus the U.S. dollar on Friday, ending a seven-day losing streak, encouraged by a late stock market rally and after the currency failed to drop through a key technical level.
Bond prices were lower across the board on the late-session stock market bounce, reversing early gains stemming from dour jobs figures.
The currency finished the session at C$1.2709 to the U.S. dollar, or 78.68 U.S. cents, up from C$1.2781 to the U.S. dollar, or 78.24 U.S. cents, at Thursday's close.
"We got some bounce in the equity markets into the close of the week. On the technical side, we couldn't quite take out the recent (U.S. dollar) high," said David Watt, senior currency strategist at RBC Capital Markets.
November employment reports in Canada and the United States came in much weaker than expected and pushed the Canadian dollar as low as C$1.3007, or 76.88 U.S. cents. But it rebounded after being unable to significantly break the Oct. 28 low of C$1.3017.
Canada's economy shed 70,600 jobs in November, more than any other month since June 1982 and nearly triple the forecast figure, Statistics Canada said. The unemployment rate ticked higher to 6.3 percent from 6.2 percent in October. [ID:nN05440350]
The U.S. economy shed a shocking 533,000 jobs in November for the weakest performance in 34 years, data showed. [ID:nN04409522]
The Canadian currency fell 3.5 percent over its seven days of declines, pulled down by risk aversion, which saw the U.S. dollar rise on safe haven interest.
Easing crude oil prices, which fell to under $42 a barrel on worries about falling demand on Friday, were also a negative factor this week. The Canadian dollar has tracked crude prices closely due to Canada's big oil exports.
Bond prices tumbled as stock markets surged late in the afternoon, and despite the jobs reports that heightened expectations that North America's central banks will cut interest rates steeply this month after some aggressive rate cuts overseas earlier this week.
Toronto stocks capped off a losing week with a higher close as a rebound in financial shares helped offset the drag lower oil prices had on the resource-heavy market. [ID:nTOR003952] Cheaper oil boosted consumer stocks in the United States and sparked a big rally. [ID:nN05477264]
The Canadian jobs report underscored market expectations that the Bank of Canada will chop its key overnight lending rate next Tuesday by at least 50 basis points, a Reuters poll found. [ID:nN05295443]
The central bank has reduced its key overnight lending rate by 225 basis points since December 2007 to 2.25 percent and has signaled its intention to ease further.
The two-year bond slumped 9 Canadian cents to C$102.29 to yield 1.572 percent. The 10-year bond lost 40 Canadian cents at C$109.40 to yield 3.098 percent.
The yield spread between the two-year and 10-year bond was at 152 basis points, down from 158 basis points at the previous close.
The 30-year bond fell 45 Canadian cents to C$121.45 to yield 3.766 percent. In the United States, the 30-year Treasury yielded 3.1198 percent. (Reporting by Ka Yan Ng; editing by Peter Galloway)