C$ lags most G10 currencies as U.S. jobless claims rise

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Canadian dollar gains 0.1% against the greenback

Oil settles 1.7% lower

10-year yield pulls back from three-month high

Updated at 3:50 p.m ET (1950 GMT

By Fergal Smith

TORONTO, June 8 (Reuters) -The Canadian dollar strengthened against its U.S. counterpart on Thursday, but the move was limited as oil prices fell and investors weighed signs of weakening in the U.S. economy.

The loonie CAD= was trading 0.1% higher at 1.3355 to the greenback, or 74.88 U.S. cents, the smallest gain among G10 currencies. On Wednesday, it touched a four-week high at 1.3319 as the Bank of Canada restarted its tightening campaign.

The number of Americans filing new claims for unemployment benefits surged to the highest level in more than 1-1/2 years last week. While economists cautioned against reading too much into the data it could add to evidence that the labour market is gradually cooling.

"There is no economy more leveraged to the United States economy than Canada," said Adam Button, chief currency analyst at ForexLive, adding that additional rate hikes by the Bank of Canada could prove to be a mistake if the global economy slows down.

Canada sends about 75% of its exports to the United States, including oil. U.S. crude oil futures CLc1 settled 1.7% lower at $71.29 a barrel.

Surprisingly strong household spending in the first quarter and stubbornly high core inflation were among the top reasons the BoC hiked rates after a four-month pause, said Deputy Governor Paul Beaudry.

Canada's employment report for May, due on Friday, could offer clues on prospects for further rate hikes.

Canadian government bond yields eased across much of the curve. The 10-year CA10YT=RR was down 2.9 basis points at 3.414%, after earlier touching a three-month high at 3.466%.

Reporting by Fergal Smith
Editing by Alistair Bell


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