* C$ at C$1.0354 vs US$, or 96.58 U.S. cents * Stronger-than-expected Canadian jobs data supports currency * Hope for U.S. shutdown, debt resolution buoys markets By Solarina Ho TORONTO, Oct 11 (Reuters) - The Canadian dollar strengthened on Friday after Canadian employment figures came in stronger than expected, with the jobless rate falling below 7 percent for the first time in nearly five years. Concern about the U.S. debt-ceiling standoff eased, also supporting the currency. Canada added 11,900 jobs in September and the unemployment rate dropped to 6.9 percent, mostly due to fewer youths looking for work, Statistics Canada said. The gain surpassed the 10,000 new jobs forecast by economists. The jobless rate, which stood at 7.1 percent in August, touched the lowest since the 6.8 percent in December 2008. "The employment data was not as bad as people had feared. There maybe was bit of expectation after the big gain in the previous month that there'd be more payback. That's not really the case fortunately, so that helps," said David Tulk, chief Canada macro strategist at TD Securities. Tulk said signs of progress towards ending the U.S. government shutdown and avoiding a possible U.S. default also boosted risk-on trade, fueling U.S. stocks and the Canadian currency. "So any potential resolution of this budget impasse and addressing the risks surrounding the debt ceiling is obviously a good thing for risk and good thing for the Canadian dollar," Tulk said. The U.S. Senate is expected to vote over the weekend on extending the federal borrowing limit through January 2015. President Barack Obama and congressional Republican leaders worked to end their fiscal impasse on Friday, but struggled to strike a deal on the details for a short-term reopening of the federal government and an increase in the U.S. debt limit. The Canadian dollar ended the North American session at C$1.0354 versus the greenback, or 96.58 U.S. cents, up from Thursday's finish at C$1.0396, or 96.19 U.S. cents. The loonie touched its firmest level of the day earlier at C$1.0340, or 96.71 U.S. cents. Its performance was mixed against other major currencies ahead of Canada's Thanksgiving long weekend. Thanksgiving Day is Monday. Hopes that lawmakers were nearing a deal to avert a U.S. debt default bolstered global equity markets on Friday, but trading in short-dated Treasury debt suggests bond-market investors are concerned the battle will merely be pushed to later in the year. Fears of a possible U.S. debt default have damaged the credibility of the world's largest economy and hurt the dollar. Government bond prices were mostly flat to higher across the maturity curve. The two-year bond was flat and yielding 1.211 percent, while the benchmark 10-year bond was flat and yielding 2.592 percent.