* Canada added 58,300 jobs; more than twice expected
* US payrolls up 244,000, largest in 11 months
* C$ firms to C$0.9573 vs US$, or $1.0446, after U.S. data
* Bond prices extend losses across yield curve
* Interest rate hikes expected in July at the earliest (Updates after U.S. jobs data)
By Claire Sibonney
TORONTO, May 6 (Reuters) - Canada's dollar jumped against the U.S. currency on Friday, reversing its recent selloff on the back of plunging commodity prices, after jobs reports from both sides of the border blew past expectations.
The currency CAD=D4 firmed to a session high of C$0.9573 versus the U.S. dollar, or $1.0446, shortly after data that showed U.S. nonfarm payrolls rose 244,000 last month, the most in 11 months. [ID:nOAT004799]
"CAD is outperforming, it's a good way to play strength in the U.S. economy," said Elsa Lignos, G10 currency strategist at RBC Capital Markets in London.
"No denying that this is a very firm payrolls report and we still favor long CAD positions, particularly as we head into the May 31 Bank of Canada meeting where we think they're going to start laying the ground for hikes beginning in July."
The Canadian dollar was already on solid footing compared to Thursday's close, following the country's own upside surprise in employment figures. [ID:nN06160819]
Canada's economy created far more jobs than expected and recovered all the full-time positions lost in the recession, setting the stage for solid second-quarter growth and interest rate hikes later this year.
Net job creation totaled 58,300 in the month, Statistics Canada said on Friday, exceeding the forecast in a Reuters poll of a 22,500 gain.
Details of the report were less impressive as most of the job creation was in part-time positions and in the services sector where wages tend to be lower.
The domestic jobs data reinforces market expectations the Bank of Canada will see no need to resume hiking interest rates until July at the earliest, following three increases last year that brought its key policy rate to 1.0 percent.
At 9:13 a.m. (1313 GMT), the Canadian dollar CAD=D4 was at C$0.9585 to the U.S. dollar, or $1.0433, up sharply from Thursday's finish at C$0.9682 to the U.S. dollar, or $1.0328.
The currency slumped to its lowest level against the U.S. dollar in more than two weeks on Thursday as the wave of selling across commodity markets accelerated on weak economic data and a discouraging outlook.
Overnight index swaps, which trade based on expectations for the key central bank rate, showed investors slightly increasing bets on rate hikes throughout the rest of 2011 just after the data was published. BOCWATCH
Canadian bond prices extended losses across the curve, tracking U.S. Treasuries lower after the strong U.S. jobs data tempered anxiety that the economic recovery there is sputtering. [US/]
The yield on the two-year Canadian government bond CA2YT=RR, which is especially sensitive to Bank of Canada rate moves, rose to 1.742 percent from 1.666 percent just before the Canadian jobs report.
The 10-year bond CA2YT=RR lost 55 Canadian cents to yield 3.256 percent. (Additional reporting by Ka Yan Ng; editing by Jeffrey Hodgson)