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Job gains push Canadian dollar higher, Ukraine/Russia standoff worsens

TORONTO - The Canadian dollar closed higher Friday as revised jobs data for July beat expectations by a wide margin.

The loonie was up 0.12 of a cent to 91.84 cents US.

Statistics Canada reported that the economy added 42,000 positions last month. Economists had generally expected that about 20,000 jobs were created in July.

The federal agency said earlier this week that it had discovered an error in its jobs data, originally released Aug. 8, showing the economy had added a meagre 200 jobs last month.

The agency says the error resulted from a major redesign of its market-moving Labour Force Survey that occurs every 10 years when one program was not updated, which it calls a human error. The mistake resulted in Statistics Canada overestimating full-time job losses.

The loonie's rise came as traders generally sought safe havens amid a worsening in the standoff between Ukraine and Russia.

NATO said that Russian military vehicles crossed into Ukraine during the night and the Ukrainian president said most of the force was quickly destroyed by his troops. Russia denied any incursion.

The yield on the benchmark 10-year U.S. Treasury fell to 2.343 per cent late in the afternoon, down from 2.375 per cent earlier in the day. December bullion halved earlier losses. However, gold was still down $9.50 to US$1,306.20 an ounce.

The mood on financial markets had been positive earlier as traders believed there had been a further easing of tensions in Ukraine.

Russia let Ukrainian officials inspect an aid convoy on Friday and agreed to let the Red Cross distribute the aid around the rebel-held city of Luhansk. Ukraine had said it was worried that the aid operation might be a ruse to get military help to separatist rebels.

Markets had been further reassured after Russian President Vladimir Putin appeared to tone down his rhetoric on Ukraine on Thursday, saying that Moscow's goal was "to stop bloodshed in Ukraine as soon as possible."

The loonie also advanced amid solid manufacturing numbers.

Statistics Canada reported that manufacturing sales rose 0.6 per cent in June to $52 billion, the fifth gain in six months. The gain stemmed from a three increase in non-durable goods sales, led by the chemical, petroleum and coal products as well as the food industries.

The agency added that lower sales in the motor vehicle industry offset a portion of the gains in June. Sales in the industry were down 8.6 per cent to $4.5 billion, the first decrease following two months of strong gains.

Elsewhere on commodity markets, September crude in New York was ahead $1.77 to US$97.35 a barrel.

September copper gained a penny to US$3.10 a pound.

The Canadian Press

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