* Canadian dollar rises 0.2 percent against U.S. dollar
* Housing data weaker than expected
* Bond prices mixed as market eases off rally
By John McCrank
TORONTO, Aug 11 (Reuters) - The Canadian dollar eked out a gain against the U.S. dollar on Monday as the market pulled back from last week's steep selloff which saw the domestic currency lose 3.8 percent against the greenback.
Bond prices were mixed, rallying after Canadian housing data came in worse than expected, but then falling off as traders reassessed how much they thought the central bank would reduce interest rates by the end of the year.
At 9:26 a.m. (1326 GMT), the Canadian dollar was at C$1.0651 to the U.S. dollar, or 93.89 U.S. cents, up from C$1.0674 to the U.S. dollar, or 93.69 U.S. cents, at Friday's close.
The currency spent the overseas session within a tight range of C$1.0614 and C$1.0684.
The U.S. dollar eased off its recent highs during overseas trading as investors locked in gains.
"I don't think you'd want to call an end to this (U.S.) dollar rise just yet, but I wouldn't be surprised to see maybe a little bit of a pullback as we await some more data later in the week," said Steve Butler, director of foreign exchange trading at Scotia Capital.
As data from most advanced economies point to a slowing trend, the United States appears to be nearing the tail end of its economic slump.
Futures markets are starting to price in interest rate cuts in much of the developed world, while the next monetary policy decision by the U.S. Federal Reserve is expected to be a rate hike, which has been supporting the greenback.
Domestic data on Friday showed a continued cooling in Canada's housing market.
And reports on Monday showed Canadian housing starts weaker than expected in July and year-over-year new-home price increases in June at their weakest in six years.
"I don't think there's any major surprises with the data being on the weak side," said Butler.
"I think the slowdown in housing was probably expected and a bit overdue, so we're not really taking a huge cue off that this morning because the sting was already felt on Friday's employment numbers."
Data on Friday showed Canada lost 55,000 jobs in July, the biggest drop since the recession of 1991.
BOND PRICES MIXED
Bond prices rose on the back of the domestic housing data, but unwound some gains as traders reassessed how much they thought the central bank would reduce interest rates before the end of the year.
"I think there's just a bit of fatigue in the Canadian bond market," said Mark Chandler, fixed income strategist at RBC Capital Markets.
"We've priced in two cuts by the Bank of Canada, so if anything, Canada may look a little stretched here on a valuation basis."
The overnight Canadian LIBOR rate LIBOR01 was 3.070 percent.
Friday's CORRA rate CORRA= was 3.003 percent, down from 3.014 percent on Thursday. The Bank of Canada publishes the previous day's rate at around 9 a.m. daily.
The two-year bond rose 2 Canadian cents to C$101.82 to yield 2.705 percent. The 10-year bond added 1 Canadian cent to C$105.18 to yield 3.617 percent.
The yield spread between the two-year and 10-year bond was unchanged at 109 basis points.
The 30-year bond sagged 11 Canadian cents to C$115.89 for a yield of 4.059 percent. In the United States, the 30-year treasury yielded 4.561 percent.
The three-month when-issued T-bill yielded 2.48 percent, unchanged from the previous close. (Editing by Bernadette Baum)