(Updates with analyst comment, market open prices)

By Sanchayaita Roy

Sept 5 (Reuters) - Canada's main stock index extended

its record rally for the fifth straight session on Friday, after

data showed surprise job loss in August and strengthened

expectations for a potential interest-rate cut by the Bank of

Canada later this month.

The S&P/TSX composite index was up 0.4% at

29,026.81 points and was set for an all-time closing high, if

gains held. It is also poised for a record weekly close, marking

its fifth consecutive week in green.

Data showed Canada had almost 1.6 million people unemployed

in August as the economy lost thousands of jobs. The

unemployment rate scaled over a nine-year peak, barring the

pandemic years.

U.S. job growth weakened sharply in August and the

unemployment rate rose to 4.3%, confirming labour market

conditions were softening and sealing the case for an

interest-rate cut from the Federal Reserve this month.

"A 66k employment decline Canada in August was after a

41k contraction in July and adds to evidence that the trade war

is taking its toll on Canadian labour markets", Claire Fan,

senior economist at Royal Bank of Canada, said in a note.

"The negative job market report today increases the odds

that the BoC could see fit to cut interest rates further."

Money markets were betting the odds of a 25 basis-point

interest-rate cut on September 17 at almost 92% after the jobs

report, from 72% earlier.

The BoC has kept rates steady at 2.75% at its last three

meetings since March.

Canada's 10-year bond yields fell 6.7 basis

points to a two-month low of 3.28%, boosting equities.

Separate data showed Canada's economic activity barely

expanded in August as employment declined and prices cooled.

Ten of the TSX's 11 sectors rose, with technology stocks

leading with a 2.2% gain.

Electronics manufacturing services firm Celestica ( CLS )

jumped 7.8% to a record high.

However, energy stocks fell 1.1% as oil prices

extended decline into a third session.