* C$ at 7-month high of C$0.98 vs US$, or $1.0204 * Soft U.S. GDP data weakens greenback * Bank of Canada outlook supports * Bond prices mostly lower By Jon Cook TORONTO, April 27 (Reuters) - The Canadian dollar firmed to a seven-month high against the U.S. currency on Friday as the greenback weakened against a range of currencies following soft U.S. economic growth data that raised prospect of more stimulus from the Federal Reserve. First-quarter U.S. economic growth cooled as businesses cut back on investment and restocked shelves at a slower pace. The GDP data came on the heels of Thursday's disappointing U.S. jobless claims report, raising expectations that the Fed could launch another round of monetary easing, which would likely be negative for the greenback. "A generally weak U.S. dollar on the back of the GDP report leaves the door open to further dovishness from the Fed," said Camilla Sutton, chief currency strategist at Scotiabank. "The Canadian dollar has rallied a fair bit over the last few sessions," added Sutton. At 1:44 p.m. (1744 GMT), the Canadian dollar was at C$0.98 versus the U.S. currency, or $1.0204, up from Thursday's finish at C$0.9840 versus the U.S. currency, or $1.0163. The session high marked its strongest level since Sept. 19. The currency was on track to notch its best weekly gain in more than a month. The Canadian dollar shrugged off an euro zone debt worries after Spain's credit rating suffered another downgrade and data on Friday revealed nearly 25 percent of the debt-ravaged nation's workforce is unemployed. Earlier this week Fed Chairman Ben Bernanke said the U.S. central bank "would not hesitate" to launch another round of bond purchases to drive borrowing costs lower if it looked like the economy needed it. That contrasted sharply with the Bank of Canada's more positive Canadian economic outlook earlier this month that has signaled the bank may start raising interest rates sooner than expected. On Friday, Bank of Canada Governor Mark Carney maintained the bank's "hawkish bias" when he addressed a business audience in Ottawa, said Sutton. She added a stronger Canadian dollar could temper Carney's desire to raise interest rates, for fear of boosting the currency too high and hurting Canadian exports. "If we see a big rally in the Canadian dollar the expectations for interest rate (hikes) get priced out," she said. Sutton said now that the currency has broken out of the range its traded in since January, C$0.98 is a key target, with a close stronger than this "psychological" level likely to point to further strength. Canadian government bond prices were mostly lower. Canada's two-year bond sagged 7 Canadian cents to yield 1.414 percent, while the benchmark 10-year bond dropped 23 Canadian cents to yield 2.078 percent.