* Canadian dollar rises 0.3% against the greenback
* Canada's economy gains 81,100 net jobs in August
* Loonie touches its strongest since Aug. 5 at 1.3179
* Canada-U.S. 2-year spread hits narrowest since October 2017
By Fergal Smith
TORONTO, Sept 6 (Reuters) - The Canadian dollar strengthened to a one-month high against its U.S. counterpart on Friday, as domestic data showing a bigger-than-expected jobs gain in August reduced investor expectations for a Bank of Canada interest rate cut next month.
The Canadian economy gained 81,100 net jobs in August, largely driven by increases in part-time work, Statistics Canada data showed. That was much more than the 15,000 increase that analysts had expected. the Bank of Canada was on the fence about cutting rates in October, today's jobs numbers might be one further push towards standing pat," Avery Shenfeld, chief economist at CIBC Capital Markets, said in a note.
Chances of a cut at the Bank of Canada's next interest rate decision on Oct. 30 fell to 22% from 28% before the data, the overnight index swaps market indicated. BOCWATCH
They were nearly 70% before Wednesday's interest rate decision, which showed no indication that the central bank was planning to cut rates despite easing this year by many of its global peers, including the U.S. Federal Reserve.
At 9:10 a.m. (1310 GMT), the Canadian dollar CAD=D4 was trading 0.3% higher at 1.3186 to the greenback, or 75.84 U.S. cents.
The currency, which touched its strongest since Aug. 5 at 1.3179, was on track to break a seven-week losing streak. For the week, it was up 0.9%.
Gains for the loonie came as the U.S. dollar was pressured by data showing U.S. employers added fewer workers than expected in August. price of oil, one of Canada's major exports, fell as U.S.-China trade tensions continued to weigh on sentiment despite recent diplomatic progress. U.S. crude oil futures CLc1 were down nearly 2% at $55.19 a barrel.
Canadian government bond prices were lower across a flatter yield curve, with the two-year CA2YT=RR down 6.5 Canadian cents to yield 1.489% and the 10-year CA10YT=RR falling 21 Canadian cents to yield 1.287%.
The gap between Canada's 2-year yield and its U.S. equivalent narrowed 4.1 basis points to a spread of -4.7 basis points, its narrowest gap since October 2017.