CANADA FX DEBT-C$ hurt by risk aversion; focus on Friday's jobs

* Canadian dollar at C$1.0670 or 93.72 U.S. cents
    * Bond yields down, 10-year at lowest in over a year

    By Leah Schnurr
    TORONTO, July 10 (Reuters) - The Canadian dollar weakened
against the greenback on Thursday, but stayed in its recent
trading range, as the market waited for a cue from employment
data due at the end of the week. 
    Helping to nudge the loonie lower was broader risk aversion
in markets, spurred by concerns over the health of Portugal's
top listed bank. 
    "That risk-off tone is permeating through the market today
and that is having some impact on the U.S. dollar-Canadian
dollar," said Mazen Issa, senior Canada macro strategist at TD
Securities in Toronto.
    After hitting a six-month high last week, the Canadian
dollar's recent rally has ground to a halt with the loonie
mainly trading sideways.
    The Canadian dollar was at C$1.0670 to the
greenback, or 93.72 U.S. cents, weaker than Wednesday's close of
C$1.0660, or 93.81 U.S. cents.
    Attention was squarely on the Canadian jobs market report
due on Friday, which is forecast to show the economy added
20,000 jobs in June, slowing slightly from the month before. The
unemployment rate is expected to hold steady at 7 percent.
    The jobs report will be a prelude to next week's monetary
policy statement from the Bank of Canada, which investors are
also positioning for. 
    The central bank has repeatedly flagged its concern about
the low inflation environment, but after some recent
stronger-than-expected inflation readings there is speculation
over whether the bank will be forced to change its message.
    The Bank of Canada will release its updated economic
forecasts at the same time.
    The central bank's business outlook survey, which was
released earlier this week and showed that inflation
expectations remain well-anchored, could serve as a template for
its statement next week, Issa said. 
    "When you take the business outlook survey and the anchored
inflation expectations with the still-slow growth in Canada,
that gives them ample room for now to continue to sound cautious
at next week's meeting," he said.
    The risk-off sentiment saw investors rush to safe-haven
bonds, sending the yield on Canadian government benchmark
10-year bond down to 2.203 percent, its lowest level
in over a year.
    The two-year was up 5-1/2 Canadian cents to yield
1.096 percent.

 (Editing by Peter Galloway)