TORONTO - The Canadian dollar closed higher Thursday amid employment data that blew past expectations.

The loonie was up 0.26 of a cent to 100.62 cents US after Statistics Canada reported that the economy created 82,300 jobs in March, far higher than the approximately 10,000 jobs economists had been expecting.

Also, the jobless rate fell to 7.2 per cent from 7.4 per cent in February.

Meanwhile, traders were also looking ahead to the U.S. non-farm payrolls report for March, which is being released Good Friday morning when markets will be closed.

Economists expect U.S. job creation to come in around 210,000, which would be the fourth month in a row that the American economy has turned out more than 200,000 jobs.

The loonie had been lower prior to the release of the jobs data as the European debt crisis again weighed on markets.

Traders were generally averse to risk after a disappointing Spanish government bond auction Wednesday that put the European debt crisis back at centre stage.

The TSX and the Dow racked up triple-digit losses Wednesday after Spanish bond yields shot up to a near three-month high in a signal that investor confidence in Spain’s finances was weakening. Spain announced tax increases and budget cuts last week.

Spain’s five-year yields climbed 19 basis points to 4.45 per cent, their highest level since January. Spain sold €2.59 billion of bonds versus an intended maximum of €3.5 billion.

Investors are concerned over the ability of the government to push through its big austerity program at a time when the Spanish economy is heading for a return to recession and unemployment is around 23 per cent. The yield on the country’s 10-year bond pushed up a further 0.08 percentage point to 5.74 per cent Thursday, the highest level since November.

Countries such as Italy and Spain were faced with sharply higher bond yields late last year as investors lacked confidence in their governments to cut deficits and demanded higher premiums for rolling over debt. The problem receded in December after the European Central Bank made large amounts of money available to eurozone banks at very low interest rates, which was in turn used to buy up government bonds in a program known as long-term refinancing operations (LTROs).

However, that facility expired at the end of March.

The fear among investors is that if the borrowing rate climbs too high, Spain will have to follow Greece, Portugal and Ireland and seek outside help to pay its bills. Those three countries got bailouts after their borrowing rates rose above seven per cent.

Europe has weighed on markets for most of this week after purchasing managers data indicated the eurozone is facing recession.

The American dollar had also moved higher earlier this week after minutes from the Federal Reserve’s March 13 meeting showed that central bank policy-makers were worried that recent strong gains in hiring could fizzle if U.S. economic growth doesn’t pick up.

However, the minutes also showed that only a couple of members wanted to take further steps to boost the economy, such as quantitative easing, which involves the Fed buying up bonds.

Meanwhile, commodity prices started to recover from sharp losses the previous two sessions, with the May crude contract up $1.84 to US$103.31 a barrel after demand concerns drove prices down almost $4 this week.

Copper was up one cent to US$3.80 a pound after sliding 13 cents on Wednesday and Gold gained $16 to US$1,630.10 an ounce.