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CANADA FX DEBT-C$ hurt by risk aversion; focus on Friday's jobs

* Canadian dollar at C$1.0670 or 93.72 U.S. cents * Bond yields down, 10-year at lowest in over a year By Leah Schnurr TORONTO, July 10 (Reuters) - The Canadian dollar weakened against the greenback on Thursday, but stayed in its recent trading range, as the market waited for a cue from employment data due at the end of the week.

Helping to nudge the loonie lower was broader risk aversion in markets, spurred by concerns over the health of Portugal's top listed bank.

"That risk-off tone is permeating through the market today and that is having some impact on the U.S. dollar-Canadian dollar," said Mazen Issa, senior Canada macro strategist at TD Securities in Toronto.

After hitting a six-month high last week, the Canadian dollar's recent rally has ground to a halt with the loonie mainly trading sideways.

The Canadian dollar was at C$1.0670 to the greenback, or 93.72 U.S. cents, weaker than Wednesday's close of C$1.0660, or 93.81 U.S. cents.

Attention was squarely on the Canadian jobs market report due on Friday, which is forecast to show the economy added 20,000 jobs in June, slowing slightly from the month before. The unemployment rate is expected to hold steady at 7 percent.

The jobs report will be a prelude to next week's monetary policy statement from the Bank of Canada, which investors are also positioning for.

The central bank has repeatedly flagged its concern about the low inflation environment, but after some recent stronger-than-expected inflation readings there is speculation over whether the bank will be forced to change its message.

The Bank of Canada will release its updated economic forecasts at the same time.

The central bank's business outlook survey, which was released earlier this week and showed that inflation expectations remain well-anchored, could serve as a template for its statement next week, Issa said.

"When you take the business outlook survey and the anchored inflation expectations with the still-slow growth in Canada, that gives them ample room for now to continue to sound cautious at next week's meeting," he said.

The risk-off sentiment saw investors rush to safe-haven bonds, sending the yield on Canadian government benchmark 10-year bond down to 2.203 percent, its lowest level in over a year.

The two-year was up 5-1/2 Canadian cents to yield 1.096 percent.

(Editing by Peter Galloway)