CANADA FX DEBT-C$ hits 2-1/2 month high on risk rally; jobs data dampen moves

* Canadian dollar at C$1.2978, or 77.05 U.S. cents

* Bond prices mixed across the maturity curve

TORONTO, Oct 9 (Reuters) - The Canadian dollar rallied against its U.S. counterpart on Friday, at one point touching its strongest level since late July, as investors took on more risk, relieved by indications of a more dovish U.S. Federal Reserve.

The currency surged to a session high immediately after data showed the Canadian economy created 12,100 jobs last month, but quickly pared gains as market participants digested the report, which included an unexpected rise in the unemployment rate to 7.1 percent.

“I would say despite the headline, the overall snapshot is softer than most would have expected, so as a standalone report it’s ever so slightly negative for the currency,” said Doug Porter, chief economist, BMO Capital Markets.

“But I think there are bigger forces at play here. If oil heads higher today, that will wash away the impact of this report.”

At 9:52 a.m. EDT (1352 GMT), the Canadian dollar traded at C$1.2978 to the greenback, or 77.05 U.S. cents, stronger than the Bank of Canada’s official close of C$1.3017, or 76.82 U.S. cents on Thursday.

The loonie traded as strong as C$1.2901, a level not seen in nearly 2-1/2 months, while its weakest was C$1.3022.

Global markets rallied after minutes from the Fed’s September policy meeting indicated the U.S. central bank was in no hurry to hike interest rates, given uncertainty in the global economy.

Investors embraced more risk, with commodities registering some of their biggest gains in years after recent big losses.

The price of crude oil, a major Canadian export, was headed for its biggest weekly rise in more than six years, following the Fed minutes as well as a bullish price prediction from an influential industry forecaster.

The loonie has closely tracked the volatility of crude prices over the last year. U.S. crude, which hit a high of $50.92 a barrel earlier in the session, was little changed at $49.38, while Brent lost 1.2 percent to $52.44.

Canadian government bond prices were mixed across the maturity curve, with the two-year price up 0.5 Canadian cent to yield 0.552 percent and the benchmark 10-year falling 7 Canadian cents to yield 1.513 percent.

The Canada-U.S. two-year bond spread was -9.3 basis points, while the 10-year spread was -59.8 basis points. (Editing by Jeffrey Benkoe)