CANADA FX DEBT-C$ weak on global outlook, shrugs off Canada data

* C$ down at 95.37 U.S. cents

* Canada adds 24,700 jobs, unemployment rate steady

* May U.S. payrolls report far weaker than expected

* Hungary govt sees deficit overshoot

* Bond prices edge higher across curve (Adds details)

By Ka Yan Ng

TORONTO, June 4 (Reuters) - The Canadian dollar extended a decline against the U.S. dollar on Friday as market players looked past stronger-than-expected Canadian jobs numbers and focused on new concerns about the outlook for European and global growth.

The currency touched a session low at C$1.0507 to the U.S. dollar, or 95.17 U.S. cents, after the U.S. jobs report reinforced the view of a gradual U.S. economic recovery and likelihood that the Federal Reserve will stand pat on interest rates until 2011.

The softer-than-expected U.S. jobs figures added to pressure stemming from news that Hungary's finances were in much worse shape than previously expected, which intensified concern about Europe's fragile health. [ID:nLDE6521H1]

"Canada's better-than-expected numbers were overshadowed by events and volatility coming out of the eurozone," said Jack Spitz, managing director of foreign exchange at National Bank Financial.

He said the euro was being watched for the psychologically important $1.20 level, and if broken, could create further U.S. dollar buying, and put pressure on the Canadian dollar.

At 9:15 a.m. (1315 GMT), the Canadian currency CAD=D4 was at C$1.0485 to the U.S. dollar, or 95.37 U.S. cents, down sharply from C$1.0412 to the U.S. dollar, or 96.04 U.S. cents, at Thursday's close.

Canada added 24,700 jobs in May, almost double the expected number, as the economy posted its fifth consecutive monthly increase in employment. The unemployment rate remained at 8.1 percent in May, matching market forecasts. [ID:nN04104059]

The Canadian dollar briefly firmed to a session high of C$1.0352 to the U.S. dollar, or 96.60 U.S. cents, just after the report from about C$1.0379, or 96.35 U.S. cents before the data's release.

"Everybody's completely ignoring the fantastic news we had from the employment numbers and concentrating on the bigger picture, which looks like more woes for the debt situation in Europe," said Steve Butler, director of foreign exchange trading at Scotia Capital.

Still, the Canadian jobs data could provide more ammunition for the Bank of Canada, which raised its key interest rate earlier this week, to continue hikes in July.

"This would further suggest we could likely see another 25 basis point hike in July," said Matthew Strauss, senior currency strategist at RBC Capital Markets.

Yields on overnight index swaps, which trade based on expectations for the Bank of Canada's key policy rate, showed a little more than 50 percent chance that further tightening was in store. BOCWATCH

BOND PRICES HIGHER

Canadian bond prices were moved higher across the curve, following U.S. Treasuries, after a smaller-than-expected increase in U.S. nonfarm payrolls.

U.S. employers created 431,000 jobs in May, below the 513,000 increase predicted by analysts polled by Reuters, the U.S. Labor Department said. The jobless rate fell more than expected to 9.7 percent from 9.9 percent in April. [ID:nOAT004640] ECONUS

The two-year Canadian government bond CA2YT=RR was up 12 Canadian cents to yield 1.701 percent, while the 10-year bond CA10YT=RR gained 45 Canadian cents to yield 3.337 percent. (With additional reporting by Jennifer Kwan; Editing by Jeffrey Hodgson)