* Canadian dollar weakens 0.6% against the greenback * Canada's economy sheds 71,200 jobs in November * Chances of an interest rate cut by July rise to 50% * Canada-U.S. 2-year spread narrows by 7.7 basis points TORONTO, Dec 6 (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Friday, paring some of this week's gains after data showing a surprise slump in domestic jobs raised expectations for a Bank of Canada interest rate cut over the coming months. The Canadian job market lost 71,200 net positions in November while the unemployment rate rose to 5.9%, the highest seen in more than a year, data from Statistics Canada showed. Analysts had forecast a gain of 10,000 jobs. "It's clearly a very disappointing report," said Robert Both, Canadian macro strategist at TD Securities. "This is a pushback maybe against the optimism we've seen over the last few weeks." Chances of a Bank of Canada interest rate cut by July rose to 50% from about 40% before the jobs data, the overnight index swaps market indicated. Easing expectations had been cooled earlier this week by the Bank of Canada. On Wednesday, Canada's central bank held its overnight interest rate at 1.75% as expected and cited early signs the global economy was stabilizing. At 9:15 a.m. (1415 GMT), the Canadian dollar was trading 0.6% lower at 1.3254 to the greenback, or 75.45 U.S. cents. The currency, which notched on Thursday a four-week high at 1.3158, traded in a range of 1.3173 to 1.3258. For the week, the loonie was on track to rise 0.2%. The U.S. dollar rose against a basket of major currencies after data showed the U.S. economy created many more jobs than expected in November, supporting the Federal Reserve's stance of pausing interest rate cuts at its last meeting. The price of oil, one of Canada's major exports, dipped but was on track for weekly gains as a meeting of OPEC and its allies agreed to more output cuts in early 2020. U.S. crude oil futures were down 0.4% at $58.21 a barrel. Canadian government bond prices were higher across much of the yield curve, with the two-year price rising 3.5 Canadian cents to yield 1.662% and the 10-year up 10 Canadian cents to yield 1.603%. The gap between Canada's 2-year yield and its U.S. counterpart narrowed by 7.7 basis points to a spread of 2.1 basis points in favor of the Canadian bond. (Reporting by Fergal Smith; editing by Jonathan Oatis)
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