* Lower oil prices add to pressure on Canadian dollar
* Traders awaiting Friday's key Canadian jobs data
* Most bond prices up as investors flee riskier equities
By Frank Pingue
TORONTO, Nov 6 (Reuters) - The Canadian dollar closed lower versus a stronger U.S. dollar on Thursday as a slide in prices for key Canadian commodities along with tumbling equity markets sparked demand for the greenback.
Bond prices finished mostly higher as worries that the economic downturn is deepening left investors less comfortable with riskier assets such as stocks and more interested in secure government debt.
The Canadian dollar closed at C$1.1916 to the U.S. dollar, or 83.92 U.S. cents, down 2 percent from C$1.1680 to the U.S. dollar, or 85.62 U.S. cents, at Wednesday's close.
Lower commodity prices, specifically a near 7-percent drop in the price of oil, took most of the blame for the Canadian currency's latest slide. Nagging economic concerns were also shouldering some of the blame as traders tend to move into the U.S. dollar in uncertain times.
"Commodity prices were much lower ... and extreme risk aversion prompted a flight back into the greenback," said Sal Guatieri, senior economist at BMO Capital Markets.
"So just the panic buying of U.S. Treasuries and greenbacks and fear of a global recession weighed on commodity prices and by extension the Canadian currency."
The Canadian dollar skidded more than 11 percent in October as traders raced to the greenback given a dark outlook for the global economy, but a brighter mood triggered a Canadian dollar rally last week and into the early part of this week.
But with a disappointing outlook delivered by Cisco Systems ahead of Friday's employment reports from the United States and Canada, traders were uncomfortable holding riskier assets.
After an unexpected surge of 106,900 new jobs in Canada in September, analysts surveyed by Reuters expect a decline of 10,000 in October, and for the unemployment rate to rise to 6.2 percent from 6.1 percent.
BOND PRICES RALLY
Most Canadian bond prices closed higher as North American stock markets tumbled and dealers positioned themselves for the key jobs data due out early on Friday.
The Toronto Stock Exchange's main index closed 3.4 percent lower, while the Dow Jones industrial average dropped 4.85 percent.
The Canadian jobs data is due at 7:00 a.m. (1200 GMT) on Friday, and while it is considered a key report that will be watched closely, it is too soon to tell what impact it will have on the market.
"If its weak it might get ignored because it is coming off a record increase the prior month," said Guatieri. "If it's strong it might be seen as some type of apparition because it would fly in the face of what seems to be happening in the real economy."
Data on Thursday that showed Canadian building permits rose unexpectedly by 13.4 percent in September did not spark much of a move in the bond market as it is generally not viewed as a market mover.
The Ivey Purchasing Managers Index for October showed the pace of increase in purchasing activity in the Canadian economy slowed, but that report also had little impact on bonds.
The two-year bond rose 16 Canadian cents to C$101.71 to yield 1.898 percent. The 10-year bond finished 3 Canadian cents higher at C$104.03 to yield 3.743 percent.
The yield spread between the two- and 10-year bond was 185 basis points, up from 178 basis points at the previous close.
The 30-year bond was down 10 Canadian cents to C$112.50 to yield 4.240 percent. In the United States, the 30-year Treasury yielded 4.197 percent. (Editing by Peter Galloway)