* December job loss 45,900 vs forecast of 14,600 gain
* Jobless rate rises to 7.2 pct from 6.9 pct
* 2013 slowest year for hiring since 2009
* C$ hits four-year low
* Market players raise bets on a rate cut this year
By Louise Egan
OTTAWA, Jan 10 (Reuters) - Canada's job market suffered a surprise setback in December, finishing off the worst year for hiring since 2009, according to the latest in a string of weak data that has increased speculation about the possibility of an interest rate cut.
The economy lost 45,900 jobs in the month as full-time jobs disappeared over a broad range of sectors, Statistics Canada said on Friday in a report that sent the Canadian dollar to a four-year low.
The agency said also said the unemployment rate rose to 7.2 percent from 6.9 percent as more people looked for work. This pushed the Canadian rate above the 6.7 percent rate in the United States. The two countries measure their jobless rates differently, however.
The December numbers in Canada were the weakest since March 2013 and far off the market forecast of a 14,600 employment gain. The report also showed hiring in Canada in 2013 was the slowest in four years, with year-on-year employment gains in December of just 0.6 percent, compared with 1.8 percent in 2012.
U.S. December payroll data released on Friday was also weaker than expected as employers hired the fewest workers in almost three years.
The Canadian dollar extended a week-long slide after the data, hitting C$1.0946 to the greenback, or 91.36 U.S. cents, its weakest since October 2009.
"The Canadian dollar needed this like another hole in the head," said Doug Porter, chief economist at BMO Capital Markets.
"It certainly suggests the economy ended 2013 on a sour note, and will simply reinforce the downward trend in the Canadian dollar."
The Statscan household survey that produced the employment figures was conducted before ice and snow storms hit many parts of Canada in December, so extreme conditions were not blamed for the downturn.
Canada's economy outperformed that of the United States in recovering quickly from the 2008-09 recession, but it has been stuck in the doldrums more recently as exports have failed to bounce back and businesses have remained wary of investing.
Bank of Canada Governor Stephen Poloz has been suggesting since October that he is just as likely to cut interest rates as to raise them, citing chronically weak inflation and the struggling economy.
This week he told CBC television that rates will be on hold until data persuades the bank otherwise.
Overnight index swaps, which trade based on expectations for the central bank's main policy rate, showed traders increased their bets on a cut this year after the jobs report, but they did not price in a full 25-basis-point move.
One month of big job losses is unlikely to produce a major policy shift at the central bank, analysts said, especially since the numbers tend to be volatile from month to month.
Still, employment has been flat for the past six months and the latest data does lend credence to the arguments of those in the market who see a rate cut as a growing possibility.
"It keeps the Bank of Canada sounding fairly dovish, and for some it might even increase concern over the housing market with unemployment beginning to rise," said Camilla Sutton, chief currency strategist at Scotiabank.
Canada's heated housing market and record-high household debt are seen as reasons the bank may be reluctant to lower rates. The Bank of Canada has kept its main overnight target rate at 1.0 percent since September 2010.
The central bank is seen holding rates steady at its next decision date, Jan. 22, and most economists still expect its next rate move to be a hike sometime in 2015.
The details of the December employment data were mostly negative, with losses spread evenly across the goods and services sectors. Educational services saw the biggest drop, shedding 18,500 jobs, followed by accommodation and food services, other services and construction.
Some 60,000 full-time positions disappeared in December, while 14,200 part-time positions were created. Private sector jobs shrank by 26,300, compared with an increase of 18,200 in the public sector.
Statscan said the number of unemployed people looking for work in December rose by 66,900 from November, while the overall labor force grew by 21,000.
Wages for permanent employees rose 2 percent in December year-on-year, down from 2.3 percent in November.