CANADA FX DEBT-C$ hurt by strong U.S. jobs, dreadful Canada data

* Canadian dollar at C$1.2598 or 79.38 U.S. cents
    * Bond prices mostly lower across the maturity curve

    By Solarina Ho
    TORONTO, March 6 (Reuters) - The Canadian dollar extended
its retreat against the U.S. dollar on Friday hit by a slew of
negative domestic data including a January trade deficit that
more than doubled, and robust U.S. job growth in February.
    U.S. employment accelerated in February and the jobless rate
fell to a more than 6-1/2-year low of 5.5 percent, signs that
could encourage the Federal Reserve to consider hiking interest
rates in June. Nonfarm payrolls rose 295,000 last month after
rising 239,000 in January. Economists polled by Reuters had
expected a 240,000 rise. 
    In Canada, the trade deficit hit C$2.45 billion ($1.94
billion), hurt by cheap crude, a key Canadian export. It was
considerably wider than the C$1 billion shortfall analysts had
expected and the second highest after the C$2.87 billion
recorded in July 2012. 
    Meanwhile, labor productivity dropped by 0.1 percent in the
fourth quarter of 2014, in contrast to forecasts of no change,
and the value of Canadian building permits issued in January
sank by 12.9 percent to C$6.13 billion. Market analysts had
forecast a 4.3 percent drop.  
    The Canadian dollar was at C$1.2598 to the
greenback, or 79.38 U.S. cents at 9:35 a.m. (1435 GMT), weaker
than Thursday's close of C$1.2506, or 79.96 U.S. cents. It had
briefly touched C$1.2618, or 79.25 U.S. cents earlier, its
softest level in nearly two weeks.
    The North American data demonstrated the strength of the
U.S. economy compared to Canada, underscoring the likely
divergence in the monetary policies of the two countries.
    "The payroll number doesn't pull the doors off, but it
certainly puts a June Fed hike squarely back on the table," said
Greg Anderson, global head of foreign exchange strategy at BMO
Capital Markets in New York, calling the Canadian data were big
    "It puts an April rate cut right back on the table ... the
sigma of the Canadian trade data - that's a good sized
    Canadian government bond prices were mostly lower across the
maturity curve, with the two-year slipping 3.5
Canadian cents to yield 0.640 percent and the benchmark 10-year
 falling 43 Canadian cents to yield 1.571 percent.

 (Editing by Tom Brown)