* Canadian dollar at C$1.2801, or 78.12 U.S. cents
* Loonie hovers near its weakest in more than 3 months
* Bond prices rise across a flatter yield curve
TORONTO, Oct 26 (Reuters) - The Canadian dollar steadied against its broadly firmer U.S. counterpart on Thursday, with the loonie hovering near a 3-month low it hit the day before when the Bank of Canada cooled expectations for another interest rate hike this year.
The U.S. dollar climbed against a basket of major
currencies after the European Central Bank extended its bond purchases, pressuring the euro. The Bank of Canada on Wednesday left its policy rate unchanged at 1 percent. Governor Stephen Poloz pointed to slack in the labor market as evidence that there could be more room for growth in the economy without spurring price rises.
Average weekly earnings of non-farm payroll employees rose 0.9% in August from July, data from Statistics Canada showed on Thursday. Compared with August 2016, earnings climbed 1.7%. Perceived chances of another hike by the end of the year have fallen to 27 percent from 37 percent before the rate decision, the overnight index swaps market showed.
At 9:02 a.m. ET (1302 GMT), the Canadian dollar was
little changed at C$1.2801 to the greenback, or 78.12 U.S. cents. The currency traded in a range of C$1.2780 to C$1.2815. On Wednesday, it touched its weakest since July 12 at C$1.2816. Prices of oil, one of Canada's major exports, steadied near multi-month highs after an unexpected increase in U.S. crude inventories.
U.S. crude prices were up 0.10 percent at $52.23 a
barrel. Canadian government bond prices were higher across a flatter yield curve in sympathy with U.S. Treasuries and German Bunds.
The two-year edged up 0.5 Canadian cent to yield 1.467 percent and the 10-year climbed 22 Canadian
cents to yield 2.022 percent. On Wednesday, the 2-year yield touched its lowest since Sept. 6 at 1.374 percent.
(Reporting by Fergal Smith; Editing by Meredith Mazzilli)