(Adds details on activity and updates prices) * Canadian dollar rises 0.5% against the greenback * Loonie touches a three-year high at 1.2461 * Canada adds 259,000 jobs in February * Canada"s 10-year yield climbs to a 14-month high at 1.596% By Fergal Smith TORONTO, March 12 (Reuters) - The Canadian dollar rose against all the other G10 currencies on Friday and Canada"s bond yields jumped, after a bigger-than-expected domestic jobs gain supported the view that the Bank of Canada would reduce quantitative easing purchases next month. Canada added 259,000 jobs in February, beating estimates of a 75,000 increase, driven by the reopening of businesses as COVID-19 lockdowns put in place in December and January were eased, data from Statistics Canada showed. "There remains a long way to go before the employment backdrop returns to its pre-pandemic state," said Ryan Brecht, a senior economist at Action Economics. "That being said, another firm jobs report for March would likely boost market expectations of a taper as soon as the April announcement." The central bank is buying C$4 billion of bonds per week to support the economy. On Wednesday, it signaled it would reduce the pace of purchases as it continues to gain confidence in the strength of the recovery. The Canadian dollar was trading 0.5% higher at 1.2465 to the greenback, or 80.22 U.S. cents, the biggest gain among G10 currencies. It touched its strongest since February 2018 at 1.2461, while it was up 1.5% for the week. The safe-haven U.S. dollar rose following a fresh spike in Treasury yields as the prospect of economies emerging from year-long coronavirus lockdowns reignited inflation fears. The price of oil, one of Canada"s major exports, consolidated its recent gains. U.S. crude futures settled 0.6% lower at $65.61 a barrel. Canadian government bond yields were higher across a steeper curve. The 10-year touched its highest since January last year at 1.596% before dipping to 1.584%, up 14 basis points on the day. (Reporting by Fergal Smith Editing by Nick Zieminski and Alistair Bell)