* Canadian dollar at C$1.0896 or 91.78 U.S. cents
* Bond prices higher across the maturity curve
(Adds details on market activity, analyst quote, updates
prices)
By Leah Schnurr
TORONTO, May 9 (Reuters) - The Canadian dollar weakened
sharply against the greenback on Friday, pulling back from a
four-month high after data showed the domestic economy
unexpectedly shed jobs last month.
Canada lost 28,900 jobs in April versus expectations for a
gain of 12,000, and suggesting the labor market is stalled. The
unemployment rate held steady at 6.9 percent.
Analysts noted how volatile the report tends to be, however.
The loonie had risen strongly earlier in the week, and
heading into the report analysts had seen it as being vulnerable
if the jobs data disappointed the market.
"We had all the Canadian-dollar shorts cleaned out of the
market earlier in the week," said Greg Anderson, global head of
foreign exchange strategy at BMO Capital Markets in New York.
"I do think the market is now getting set back up to a 'buy
the U.S. dollar on the dips' mentality."
That could take the loonie back to a trading range of
C$1.0850 to C$1.1150, Anderson said.
The Canadian dollar ended the North American
session at C$1.0896 to the greenback, or 91.78 U.S. cents,
weaker than Thursday's close of C$1.0823, or 92.40 U.S. cents.
The loonie hit a session low of C$1.0916.
Thursday's gains had taken the currency to its highest level
since early January.
Broad strength in the U.S. dollar also put pressure on the
loonie. The greenback was up 0.6 percent against a basket of
currencies.
"This is just going to push us back into a bigger range now
that we're trading back above that C$1.0858 level," said David
Bradley, director of foreign exchange trading at Scotiabank in
Toronto.
"There's probably more room for U.S. dollar-Canadian dollar
to trade a little bit higher in the near term."
Overnight, data out of China showed consumer prices posted
the smallest rise in 18 months in April, boosting market
expectations the country will ease monetary policy.
The loonie can be sensitive to economic developments in
China, which is a major consumer of natural resources, but the
Canadian job report took precedence on Friday.
Canadian government bond prices were higher across the
maturity curve, with the two-year up 3 Canadian cents
to yield 1.059 percent, and the benchmark 10-year up
10 Canadian cents to yield 2.362 percent.
(Additional reporting by Allison Martell; Editing by Peter
Galloway)