* Canadian dollar rises 0.3% against the greenback
* Loonie touches its weakest intraday since April 26 at 1.3492
* Price of U.S. oil rises 0.1%
* Canada-U.S. 2-year spread narrows by 2.6 basis points
TORONTO, May 3 (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Friday, recovering from an earlier one-week low as the U.S. jobs report pointed to solid economic growth but tame inflation that could keep the Federal Reserve from raising interest rates.
U.S. Treasury yields fell after the jobs data as investors focused on wage inflation that was muted even as nonfarm payrolls increased by 263,000 jobs last month. on Wall Street rose, but the Canadian dollar's usual tight link to the performance of U.S. equities has waned as investors pay more attention to domestic economic headwinds than signs of improved prospects for the U.S. economy. 9:51 a.m. (1351 GMT), the Canadian dollar CAD=D4 was trading 0.3% higher at 1.3434 to the greenback, or 74.44 U.S. cents. The currency's strongest level of the session was 1.3431, while it touched its weakest since April 26 at 1.3492.
For the week, the loonie was on track to rise 0.2%.
The Canadian dollar is set to strengthen over the coming year, helped by higher oil prices, but the currency's gains will be held back by the greater interest rate offered to holders of U.S. dollars, a Reuters poll showed. price of oil, one of Canada's major exports, rose but was on track for sharp weekly declines as surging U.S. output countered production losses in sanctions-hit Iran and Venezuela. U.S. crude CLc1 prices were up 0.1% on Friday at $61.84 a barrel. government bond prices were mixed across a flatter yield curve, with the two-year CA2YT=RR down 0.5 Canadian cent to yield 1.624% and the 10-year CA10YT=RR rising 5.5 Canadian cents to yield 1.756%.
The gap between Canada's 2-year yield and its U.S. equivalent narrowed by 2.6 basis points to a spread of 69.9 basis points in favor of the U.S. bond.