CANADA FX DEBT-C$ weakens as U.S. jobs report boosts greenback

 (Adds strategist comment, CFTC data, updates prices)
    * Canadian dollar at C$1.2867, or 77.72 U.S. cents
    * Canada's capacity utilization rises to 85.0 pct in 3rd
    * Bond prices lower across the yield curve

    By Alastair Sharp
    TORONTO, Dec 8 (Reuters) - The Canadian dollar weakened
slightly against a broadly stronger U.S. counterpart on Friday
as data showed U.S. job growth increased at a strong clip in
November, adding to the loonie's sharpest weekly decline since
late October.
    The Canadian currency lost 1.3 percent over the course of
the week, with losses accelerating after Wednesday, when the
Bank of Canada held interest rates steady as expected but
surprised some with a subdued reaction to Canada's own strong
November jobs report last Friday that tempered expectations for
a rate hike in coming months.             
    "The Bank of Canada has clearly signaled they're still
cautious at this point," said Eric Theoret, a currency
strategist at Scotiabank, who said an appearance next Thursday
by Bank of Canada Governor Stephen Poloz would be a key
opportunity to update the market on the central bank's views.
    "The story for this year has been this rapid shift from the
Bank of Canada from cautious to aggressive to cautious again,"
he said.
    The central bank hiked rates twice earlier this year.
    At 4 p.m. ET (2100 GMT), the Canadian dollar          was
trading at C$1.2867 to the greenback, or 77.72 U.S. cents, down
0.1 percent.
    The currency's strongest level of the session was C$1.2805,
while it hit its weakest since Dec. 1 at C$1.2880.
    Speculators had trimmed bullish bets on the Canadian dollar
heading into the Bank of Canada rate decision, data from the
U.S. Commodity Futures Trading Commission and Reuters
calculations showed. As of Dec. 5, net long positions had
slipped to 42,466 contracts from 45,658 a week earlier.
    The slip on the day for the Canadian currency came despite
higher oil prices and firm domestic data.
    Canada's capacity utilization rose to 85.0 percent in the
third quarter, marking a 10-year high, as gains in the
construction sector offset lower extraction volumes in the oil
and gas industry.             
    Separate data showed that Canadian housing starts rose
sharply in November. The seasonally adjusted annual rate of
starts climbed to 252,184 from October's downwardly revised
    Canadian government bond prices were slightly lower across
the yield curve, with the two-year            price down 1
Canadian cent to yield 1.503 percent and the benchmark 10-year
            falling 4 Canadian cents to yield 1.861 percent.

 (Additional reporting by Fergal Smith; Editing by Nick
Zieminski and James Dalgleish)