* Canadian dollar extends momentum from last week
* Earlier slide to 4-year lows left currency oversold
* Bonds little changed as market sentiment improves
By Frank Pingue
TORONTO, Nov 3 (Reuters) - The Canadian dollar closed 2 percent higher against the U.S. dollar on Monday as traders felt the currency's steep October slide left it at more attractive levels.
Domestic bond prices were flat to slightly lower as dealers avoided huge commitments until catching a glimpse of the key Canadian employment data for October due on Friday.
The Canadian dollar closed at C$1.1809 to the U.S. dollar, or 84.68 U.S. cents, up from C$1.2045 to the U.S. dollar, or 83.02 U.S. cents, at Friday's close.
The rise by the Canadian dollar came on the heels of a 11.6 percent slide in October, its biggest monthly drop ever, when financial markets collapsed amid the financial crisis and fears of a global recession.
But many traders felt the currency's slide last week to its lowest level in more than four years was overdone and that it was looking attractive at current levels.
"The Canadian dollar is markedly stronger than most of the other currencies, so this was a case of people seeing value in an oversold currency," said Sal Guatieri, senior economist at BMO Capital Markets.
"It reaffirms that we are seeing people seek out value in these markets and they are buying things that were oversold in the past month or two."
The rally in the Canadian dollar came even as the price of oil, a major Canadian export and one that often dictates the currency's direction, fell nearly 6 percent on Monday because of slumping demand.
There is no Canadian economic data due until Thursday, when September's building permits data and Ivey Purchasing Managers Index for October are due out.
The key report of the week comes on Friday when the October jobs data is released. After an unexpected surge of 106,900 new jobs in September, analysts surveyed by Reuters now expect a decline of 10,000, and for the unemployment rate to rise to 6.2 percent from 6.1 percent.
BOND PRICES MIXED
Bond prices ended flat on the short end of the curve and turned a touch lower on the long end as dealers largely ignored some weak U.S. economic data in favor of waiting for the more important domestic jobs report due at the end of the week.
Data from the United States showed the Institute for Supply Management's index of national factory activity fell to its weakest level since 1982 and helped boost prices south of the border. But the sentiment did not spill over into Canada.
"The worse than expected ISM reading supported the U.S. treasuries market but didn't seem to have a big impact on our market," said Guatieri. "People are waiting for the key employment report due out later this week."
The two-year bond rose 1 Canadian cent to C$101.49 to yield 2.012 percent. The 10-year bond dropped 35 Canadian cents to C$103.55 to yield 3.803 percent.
The yield spread between the two-year and the 10-year bond was unchanged from the previous close at 173 basis points.
The 30-year bond fell 35 Canadian cents to C$111.50 to yield 4.297 percent. In the United States, the 30-year treasury yielded 4.322 percent. (Reporting by Frank Pingue)