CANADA FX DEBT-C$ rebounds from two-week low as domestic jobs soar

    * Canadian dollar climbs 0.4 percent against the U.S. dollar
    * Canada adds 66,800 jobs in January
    * Price of U.S. oil rises 0.4 percent
    * For the week, the loonie is on track to fall 1.2 percent
    * Canadian bond prices decline across much of the yield

    TORONTO, Feb 8 (Reuters) - The Canadian dollar strengthened
against its U.S. counterpart on Friday, reversing from a
two-week low earlier in the session after a much
stronger-than-expected gain for domestic jobs supported the Bank
of Canada's view that the economy is healthy.
    Canada added 66,800 jobs in January, the second month of
outsized gains in the last three, as services-producing sector
jobs soared, Statistics Canada reported. Analysts had forecast a
gain of 8,000 positions.             
    Bank of Canada Governor Stephen Poloz said in January that
the Canadian economy is in good shape, although low oil prices
are delivering "a material shock" that would cut growth this
    Money markets doubt that the central bank will raise
interest rates further this year, although chances of a hike by
December climbed to more than 20 percent from 13 percent after
the jobs report, data from the overnight index swaps market
    Separate data, from the Canadian Mortgage and Housing
Corporation, showed that Canadian housing starts fell less than
expected in January to 207,968 units from a revised 213,630
units in December.             
    At 9:23 a.m. (1423 GMT), the Canadian dollar          was
trading 0.4 percent higher at 1.3255 to the greenback, or 75.44
U.S. cents. The currency's strongest level of the session was
1.3233, while it touched its weakest since Jan. 25 at 1.3329.
    For the week, the loonie was on track to fall 1.2 percent.
    The gain for the loonie on Friday came as the price of oil,
one of Canada's major exports edged higher. U.S. crude oil
futures        were up 0.4 percent at $52.85 a barrel. 
    Still, oil was also headed for a weekly loss, pulled down by
worries about a global economic slowdown.             
    Investor nerves over slowing global growth weighed on stocks
on Friday after signs emerged of a lack of progress on the
U.S.-China trade talks ahead of a March 1 deadline.             
    Canadian government bond prices were lower across much of
the yield curve, with the two-year            down 1.5 Canadian
cents to yield 1.775 percent and the 10-year             falling
9 Canadian cents to yield 1.888 percent.
    The gap between Canada's 10-year yield and its U.S.
equivalent narrowed by 1.9 basis points to a spread of 75.8
basis points in favor of the U.S. bond.        

 (Reporting by Fergal Smith
Editing by Susan Thomas)