(Updates with fresh comment, closing figures, Keystone vote)
By Solarina Ho
TORONTO, Jan 9 (Reuters) - The Canadian dollar stumbled to its weakest finish in more than 5-1/2 years on Friday after North American jobs data signaled an interest rate hike in the United States and the status quo in Canada.
Canada shed 4,300 jobs in December after losing 10,700 in November. Market forecasters had estimated an increase of 15,000 jobs. The overall unemployment rate held at 6.6 percent.
Disappointment in the headline figures was tempered by the fact that wages were higher, losses were skewed toward part-time work, and full-time figures were robust, economists noted.
In the United States, nonfarm payrolls rose 252,000 last month.
"Obviously the (U.S.) dollar's strong and that's a general theme in the market across all the majors," said Lennon Sweeting, corporate dealer at USForex in San Francisco.
"Canada's numbers were on target. They weren't exceptional, but they weren't weak. They held the Canadian dollar steady and kept the Canadian dollar susceptible to U.S. dollar gains."
The Canadian dollar, which was underperforming against most major currencies, finished at C$1.1866 to the U.S. dollar, or 84.27 U.S. cents, weaker than Thursday's close of C$1.1836, or 84.49 U.S. cents.
It dropped to C$1.1890, or 84.10 U.S. cents, earlier in the session, its weakest level since May 2009.
The Canadian economy has been lagging that of the United States, and the U.S. central bank is widely expected to raise rates in mid-2015, well before the Bank of Canada.
A U.S. rate increase, or the likelihood of one, is expected to keep pressure on the loonie this year, according to a Reuters poll earlier this week.
The proposed Keystone XL oil pipeline, which would carry Alberta oil sands crude to the U.S. Gulf Coast, cleared two hurdles on Friday: the Nebraska Supreme Court allowed a route for the pipeline to cross the state, and the U.S. House of Representatives passed a bill to approve the project. The bill goes to the Senate next, but President Barack Obama is expected to reject legislation.
"If Keystone gets through the Senate, I think we could see a bit of stability in North American oil prices, so it could be a positive for loonie in the long term," Sweeting said.
Crude prices have sunk more than 50 percent since June on soft demand and too much supply, hitting the Canadian dollar as Canada is a major oil exporter.
Canadian government bond prices were higher across the maturity curve. The two-year bond added 6 Canadian cent to yield 0.952 percent, while the benchmark 10-year bond rose 40 Canadian cents to yield 1.663 percent. (Editing by Steve Orlofsky; and Peter Galloway)