CANADA FX DEBT-C$ firms as oil prices climb, U.S. wages disappoint

    * Canadian dollar at C$1.2842, or 77.87 U.S. cents
    * Oil prices rise 1.7 percent
    * Canada's capacity utilization rises to 85.0 percent in Q3
    * Bond prices mixed across the yield curve

    TORONTO, Dec 8 (Reuters) - The Canadian dollar edged higher
against its U.S. counterpart on Friday, supported by higher oil
prices and firm domestic data, while investors weighed a U.S.
employment report that was tainted by a disappointing rise in
    The U.S. dollar        pared some of its advance against a
basket of major currencies after the November jobs data, which
showed a healthy 228,000 increase in non-farm payrolls but a
weaker-than-expected annual wage gain of 2.5 percent.
    Prices of oil, one of Canada's major exports, got a boost
from rising Chinese crude demand and threats of a strike in
Africa's largest oil exporter.             
    U.S. crude        prices were up 1.7 percent at $57.64 a
    Canada's capacity utilization rose to 85.0 percent in the
third quarter, marking a 10-year high, as gains in the
construction sector offset lower extraction volumes in the oil
and gas industry.             
    Separate data showed that Canadian housing starts rose
sharply in November. The seasonally adjusted annual rate of
starts climbed to 252,184 from October's downwardly revised
    At 9:24 a.m. ET (1424 GMT), the Canadian dollar          was
trading at C$1.2842 to the greenback, or 77.87 U.S. cents, up
0.1 percent.
    The currency's strongest level of the session was C$1.2805,
while it matched Thursday's low of C$1.2868, which was its
weakest since Dec. 1.
    For the week, the loonie is on track to fall 1.2 percent,
after the Bank of Canada left its benchmark interest rate on
hold at 1 percent on Wednesday, and tempered expectations for a
hike in the coming months.
    The central bank has insisted its interest rate decisions
are data-dependent, yet analysts were puzzled this week when
policy makers took a more cautious tone than strong domestic
data would suggest.             
    Canadian government bond prices were mixed across the yield
curve, with the two-year            flat to yield 1.498 percent
and the 10-year             falling 10 Canadian cents to yield
1.868 percent.

 (Reporting by Fergal Smith; Editing by Nick Zieminski)