* Canadian dollar dips 0.3% against the greenback
* Canada sheds 7,200 jobs in March
* Loonie touches its weakest since March 29 at 1.3403
* Price of U.S. oil rises 1.6%
* Canadian bond prices edge lower across much of the yield curve
By Fergal Smith
TORONTO, April 5 (Reuters) - The Canadian dollar weakened to a one-week low against its U.S. counterpart on Friday as domestic data showing an unexpected decline in jobs diminished prospects of the Bank of Canada turning more upbeat on the economy.
A six-month string of job gains, including blockbuster increases in January and February, had helped bolster investor sentiment for the loonie, offsetting weak gross domestic product data and a slowdown in the global economy that could hurt Canada's exports.
But that sequence ended in March, as Canada shed 7,200 jobs. Analysts in a Reuters poll had forecast a marginal gain of 1,000. assumption that strong employment growth would return the Bank of Canada to a hawkish path was disappointed and traders went short on the Canadian dollar," said Karl Schamotta, director global markets strategy at Cambridge Global Payments.
Perceived chances of an interest rate cut this year from the central bank nudged up to 40% from 38% before the data, the overnight index swaps market indicated. BOCWATCH
At 2:36 p.m. (1836 GMT), the Canadian dollar CAD=D4 was trading 0.3% lower at 1.3392 to the greenback, or 74.67 U.S. cents. The currency, which was also down 0.3% for the week, touched its weakest since March 29 at 1.3403.
The loonie has advanced 1.9% since the start of the year even as it has lost ground since February, making it the second best performing currency in the G10 after sterling.
Still, strategists see little upside for the Canadian dollar over the coming months, cutting their bullish forecasts for the currency as worries about the global economy boost demand for higher-yielding U.S. dollars, a Reuters poll showed. U.S. dollar .DXY rose on Friday against a basket of major currencies, helped by data showing better-than-expected U.S. job growth.
The U.S. data was also supportive of the price of oil, one of Canada's major exports, as it tempered fears that global crude demand might weaken. U.S. crude oil futures CLc1 settled 1.6% higher at $63.08 a barrel. government bond prices edged lower across much of the yield curve, with the two-year CA2YT=RR price down 2 Canadian cents to yield 1.598% and the 10-year CA10YT=RR falling 3 Canadian cents to yield 1.704%.