* C$ ends at 98.20 U.S. cents 
 * Canada economy adds 21K jobs, jobless rate at 8.2 pct 
 * Bonds lower on rate hike expectations (Adds details) 
 By Ka Yan Ng 
 TORONTO, March 12 (Reuters) - The Canadian dollar advanced against the U.S. currency for an 11th straight session on Friday, hitting a 20-month high, after firmer than expected Canadian employment data provided more evidence that economic recovery is taking hold. 
 The Canadian dollar was already firmer in the overnight session, and after the jobs report it swiftly reached its highest level since July 2008 -- C$1.0155, or 98.47 U.S. cents -- against the U.S. currency. 
 Canada's unemployment rate fell to 8.2 percent in February from 8.3 percent in January as 20,900 more people found work in the month. Economists surveyed by Reuters had forecast net job growth of 20,000 jobs in February and an 8.3 percent unemployment rate. [ID:N12253705] 
 "That was a lot more than a feather in the currency's cap. The jobs report was unambiguous. It showed again that the recovery is truly on," said Doug Porter, deputy chief economist at BMO Capital Markets. 
 The Canadian dollar finished at C$1.0183 to the U.S. dollar, or 98.20 U.S. cents, up from C$1.0243 to the U.S. dollar, or 97.63 U.S. cents, at Thursday's close. 
 The solid employment report also raised expectations that the Bank of Canada will raise interest rates. Yields on overnight index swaps, which trade based on expectations for the central bank's key policy rate, edged higher after the report, showing the market saw credit tightening as slightly more likely than before the data. 
 Next week's Canadian inflation data could be "potentially critical" for monetary policy, said Porter. "If we and the consensus are wrong on that one, look out above for the currency," he said. 
 Market expectations are for core inflation to cool to 1.7 percent, and a surprise move higher toward the Bank of Canada's inflation target of 2 percent could spell more strength in the Canadian dollar and amplify debate on credit tightening policy. ECONCA 
 BONDS LOWER 
 As Canadian dollar has been rallying in recent weeks on expectations Canada could hike interest rates well ahead of the United States, government bond prices have been falling. 
 The Bank of Canada has pledged to keep its key interest rate at its current ultra-low level of 0.25 percent until July, but the market suggests the chances are high the rate will be around 1.0 percent by October.BOCWATCH 
 "If we continue to see data surprising to the upside to this extent that we've seen this morning I think there will be increasing speculation that the Bank of Canada might go earlier. Or, if they start in July they might hike by more than 25 basis points," said Matthew Strauss, senior currency strategist at RBC Capital Markets. 
 "That is slowly starting to filter through to the market, and therefore the negative reaction in the bond market and the positive reaction from the Canadian dollar side." 
 The move lower was supported by U.S. Treasuries, which extended losses after data showed U.S. retail sales rose in February. [US/] 
 The two-year government bond CA2YT=RR was off 12 Canadian cents at C$99.84 to yield 1.583 percent, while the 10-year bond CA10YT=RR was down 30 Canadian cents at C$101.65 to yield 3.538 percent. 
 Canadian bonds mostly undperformed their U.S. counterparts, except in the 10-year issue. The difference between 10-year yields narrowed 6.9 basis points to 15.8 basis points. (Reporting by Ka Yan Ng and Jennifer Kwan; editing by Peter Galloway) 
 Currencies Currencies ¬ 
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