(Adds strategist quotes and details on activity, updates prices) * Canadian dollar strengthens 0.3% against the greenback * Loonie touches its strongest level since Aug. 11 at 1.2489 * Price of U.S. oil settles 0.1% lower * Canadian bond yields rise across a steeper curve By Fergal Smith TORONTO, Sept 3 (Reuters) - The Canadian dollar strengthened to a three-week high against its U.S. counterpart on Friday as weaker-than-expected U.S. jobs data weighed on the greenback, offsetting a drop in oil prices. The loonie was trading 0.3% higher at 1.2513 to the greenback, or 79.92 U.S. cents, after touching its strongest intraday level since Aug. 11 at 1.2489. For the week, the currency was up 0.9%, its second straight week of gains. "The story today has been the softer (U.S.) dollar," said Amo Sahota, director at Klarity FX in San Francisco. "It looks really clear we are not going to get an indication until at least November for a (Federal Reserve) taper announcement." The U.S. dollar lost ground against a basket of major currencies after data showed that U.S. job growth slowed more than expected in August. The data could affect the timing of the Federal Reserve"s announcement on when it will start scaling back its massive monthly bond buying program. The Bank of Canada is due to make an interest rate decision next Wednesday. Analysts have been weighing the effect on the central bank"s policy outlook of a surprise contraction in Canada"s economy and signs of a cooler housing market. Canadian labor productivity rose by 0.6% in the second quarter, the first quarterly increase in a year, data showed. The price of oil, one of Canada"s major exports, gave back some of this week"s gains after the U.S. jobs data indicated a patchy economic recovery. U.S. crude oil futures settled 1% lower at $69.29 a barrel. Canadian government bond yields were higher across a steeper curve, tracking the move in U.S. Treasuries in a shortened session for the Canadian market ahead of Monday"s Labor Day holiday. The 10-year rose 3.2 basis points to 1.188%. (Reporting by Fergal Smith Editing by Chizu Nomiyama and Sandra Maler)