CANADA FX DEBT-C$ slides to two-week low on very weak jobs data

* Canada Jan employment -129K, worst job loss on record

* Unemployment rate rises to 7.2 pct from 6.6 pct in Dec

* Market looks to U.S. jobs figures at 8:30 a.m. (Adds details)

TORONTO, Feb 6 (Reuters) - Canada’s dollar tumbled to a two-week low versus the U.S. currency on Friday after a Canadian government report showing the biggest monthly job loss ever recorded.

The Canadian dollar fell from levels around C$1.2415, or 80.55 U.S. cents, just before the release of the Statistics Canada report. It had closed at C$1.2310, or 81.23 U.S. cents, on Thursday.

At one point, the currency hit C$1.2540, or 79.74 U.S. cents, its weakest level since Jan. 23.

The market had already been on the defensive after comments from Canadian Finance Minister Jim Flaherty on Thursday afternoon, said George Davis, director and chief FX technical analyst with RBC Capital Markets.

Flaherty said the Canadian January jobs report will reveal “regrettable” jobs numbers as he predicted the country’s recession will get much worse.

“The market was starting to brace itself for a more negative outturn,” Davis said. “But I don’t think anybody expected something as severely weak as what we got. Certainly it’s a very worrisome number for the market.”

Canada suffered its worst job losses in over three decades in January as the recession forced employers to cut a record 129,000 workers and pushed the unemployment rate to 7.2 percent from 6.6 percent in December. [ID:nN06253705]

“The details are actually worse than the headline print, which often isn’t the case when you get such an astounding headline,” said Derek Holt, an economist with Scotia Capital.

The market now turns to the U.S. payroll data at 830 a.m. (1330 GMT), which is expected to add to the gloom with analysts forecasting 525,000 jobs lost in January and an uptick in the jobless rate to 7.5 percent from 7.2 percent.

“As we go through the U.S. payroll data I think the market will look to buy pullbacks toward the C$1.2430 area and the risk is that we’ll see dollar/Canada move up to C$1.2650 as we move into next week,” said Davis.

Meanwhile, Canadian bond prices moved higher across the curve following the jobs report, which suggested the Bank of Canada will cut ease again at its next rate decision in March.

The interest-rate sensitive two-year bond rose 18 Canadian cents to C$102.88 to yield 1.134 percent, extending the previous session’s gains, while the 10-year bond rose 35 Canadian cents to C$110.25 to yield 2.980 percent.

The 30-year bond rallied 35 Canadian cents to C$122.50 to yield 3.709 percent. In the United States, the 30-year Treasury yielded 3.654 percent. (Additional reporting by John McCrank; Editing by Jeffrey Hodgson)