* C$ at C$1.0985 vs US$, or 91.03 U.S. cents * Canada adds higher-than-expected 29,400 jobs * U.S. adds lower-than-expected 113,000 jobs * Markets reduce bet on a Bank of Canada rate cut By Solarina Ho TORONTO, Feb 7 (Reuters) - The Canadian dollar rallied nearly a cent on Friday to its strongest against the greenback in more than two weeks after mixed North American jobs data, which showed Canadian employers hired more workers than forecast, while U.S. employers hired fewer than expected. The Canadian economy added 29,400 jobs after losing 44,000 jobs in December, while the unemployment rate fell to 7.0 from 7.2 percent, according to Statistics Canada. This is the largest employment gain since August and beat expectations of about 20,000 new hires. Full-time positions saw its largest increase since last May. "(It) dampens expectations of the possibility of the Bank of Canada having to cut rates. But certainly with inflation remaining low, there's no pressure to start moving rates higher," said Paul Ferley, assistant chief economist at Royal Bank of Canada. After the data, overnight index swaps, which trade based on expectations for the central bank's policy rate, priced in a lower expectation of an interest rate cut in March, when the Bank of Canada will next announce its rate decision. South of the border, the U.S. unemployment rate hit a new five-year low of 6.6 percent, but only 113,000 workers were hired, far lower than the 185,000 economists polled by Reuters had expected. This is the second straight month of weak hiring in the United States, suggesting a loss of momentum in the economy, which could be a problem for the Federal Reserve, which is tapering its monthly bond-purchasing stimulus program. "The mix of these two reports today is quite friendly for the Canadian dollar ... It's pretty much the sweet spot for the Canadian dollar - almost the exact opposite of what we had last month," said Doug Porter, chief economist at BMO Capital Markets. The Canadian dollar was trading at C$1.0985 to the U.S. dollar, or 91.03 U.S. cents at around 9:25 a.m. (1425 GMT), stronger than Thursday's close of C$1.1070, or 90.33 U.S. cents. This is its strongest level since Jan. 22. The Canadian dollar, which was also outperforming other major currencies, has strengthened more than 2 percent against its U.S. counterpart since hitting a 4-1/2-year low last week. Canadian government bond prices were mixed across the maturity curve, with the two-year off 4.5 Canadian cent to yield 1.004 percent and the benchmark 10-year up 16 Canadian cents to yield 2.417 percent.