CANADA FX DEBT-C$ strengthens as oil prices rise, domestic jobs surge

    * Canadian dollar at C$1.3085, or 76.42 U.S. cents
    * Loonie touches its strongest since Monday at C$1.3067
    * Bond prices lower across the yield curve

    By Fergal Smith
    TORONTO, Feb 10 (Reuters) - The Canadian dollar strengthened
against its U.S. counterpart on Friday as oil prices rose and a
surge in domestic jobs added to the risk that the Bank of Canada
will raise interest rates as soon as this year.
    Canada added 48,300 jobs in January, Statistics Canada said,
as hiring in the service sector helped the labor market build on
its momentum from the latter part of 2016. Economists had
expected no gain in jobs.              
    "It's another impressive read," said Desjardins Senior
Economist Jimmy Jean. " ... I don't recall such a steady
sequence for job creation.
    He said the Bank of Canada would remain concerned about the
quality of job creation and the number of hours worked but would
be happy with the employment market's expansion.
    The implied probability of a Bank of Canada interest rate
hike by the end of the year rose to nearly 50 percent from less
than 40 percent before the jobs report, data from the overnight
index swaps market showed.           
    U.S. crude        prices were up 1.77 percent at $53.94 a
barrel after reports that Organization of the Petroleum
Exporting Countries members delivered more than 90 percent of
the output cuts they pledged in a landmark deal that took effect
in January.      
    Oil is one of Canada's major exports. 
    At 9:27 a.m. ET (1427 GMT), the Canadian dollar          was
trading at C$1.3085 to the greenback, or 76.42 U.S. cents,
stronger than Thursday's close of C$1.3141, or 76.10 U.S. cents.
    The currency's weakest level of the session was C$1.3158,
while it touched its strongest since Monday at C$1.3067.
    Gains for the Canadian dollar came even as the greenback
       strengthened against a basket of major currencies ahead
of a meeting of U.S. and Japanese leaders.             
    U.S. President Donald Trump's promise on Thursday of a major
tax reform plan has put the focus back on efforts to boost
economic growth, reinvigorating U.S. dollar bulls.
    Canadian government bond prices were lower across the yield
curve, with the two-year            price down 8 Canadian cents
to yield 0.793 percent and the 10-year             falling 32
Canadian cents to yield 1.717 percent.
    The spread between Canada's 2-year yield and its U.S.
equivalent narrowed by 2.9 basis points to -40.5 basis points as
Canadian government bonds underperformed on the strong jobs

 (Reporting by Fergal Smith; Editing by Lisa Von Ahn)