* C$ rises to $1.0036
* U.S. ADP report shows better than expected job gains
* Bond prices fall across curve (Updates to close)
TORONTO, Jan 5 (Reuters) - The Canadian dollar recovered from session lows against the greenback on Wednesday to end above parity for a third straight session, buoyed by U.S. data that showed a much better than expected gain in private sector jobs for December.
The Canadian dollar CAD=D4 finished at C$0.9964 to the U.S. dollar, or $1.0036, up from Tuesday's close at C$0.9985 to the U.S. dollar, or $1.0015.
"We've managed to keep that level above parity for now. We'll see what Friday brings. There's a lot of intrigue and interest in both the Canadian and U.S. employment numbers. But, for the time being, people seem to be embracing risk," said Eric Lascelles, chief Canada macro strategist, at TD Securities.
"Not every risk-on currency had a banner day, but the Canadian dollar managed to eke one out."
It clawed back above par from a session low of C$1.0024 to the U.S. dollar, or 99.76 U.S. cents, following an ADP Employer Services report that showed U.S. private employers added 297,000 jobs in December, nearly triple forecasts. [ID:nN05266445]
"The perception is that the headwinds in the Canadian economy are not really domestic but primarily U.S.," said Firas Askari, head of foreign exchange trading at BMO Capital Markets, noting that the Canadian dollar was outperforming other major currencies.
"This is potentially a beginning of a trend of a pickup in employment growth, which leads to housing and everything else, which leads to us exporting more of our great commodities. That's the logic."
The currency moved higher throughout the session to touch a session high of C$0.9934 to the U.S. dollar, or $1.0066, as the ADP figures boded well for the official U.S. jobs report on Friday. Official monthly employment reports are also due from Canada.
As well, U.S. Federal Reserve Chairman Ben Bernanke's congressional testimony on Friday will be closely followed. [ID:nN31145126] ECON
According to a monthly Reuters foreign exchange poll, the currency is expected to remain fairly steady near par with the U.S. dollar for much of this year as contradicting forces at home and abroad push and pull.
The survey found 76 percent of market watchers expect the currency will stay at par or firmer over the next 12 months, although it is forecast to end the year softer than 2010. FXCAD [ID:nN05277637]
BONDS SINK AS OPTIMISM RISES
Prices for Canadian government bonds retreated after the U.S. data, tracking U.S. Treasuries lower.
The U.S. economic outlook improved further with the private payrolls figures after recent strength in trade and retail sales, prompting investors to seek riskier positions in assets such as equities rather than the relative safety of government bonds.
"The strength of U.S. economic numbers has everyone feeling very optimistic. There's a pretty powerful risk-on trade and the bond market, in particular, is selling off," said Lascelles.
The two-year bond CA2YT=RR fell 8 Canadian cents to yield 1.763 percent, while the 10-year bond CA10YT=RR shed C$1.20 to yield 3.282 percent. Canadian government bonds put in a mixed performance against their U.S. counterparts. (Reporting by Ka Yan Ng; editing by Rob Wilson)