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* C$ at C$1.0032 vs US$, or 99.68 U.S. cents * BoC's Carney testifies in parliament; stays the course * Foreign currencies volatile following G7 comments By Solarina Ho TORONTO, Feb 12 (Reuters) - The Canadian dollar erased early losses to trade stronger against its U.S. counterpart on Tuesday, caught up in volatile moves in global currency markets following comments by the Group of Seven wealthy nations. The G7 comments overshadowed the impact of testimony by Bank of Canada Governor Mark Carney to a Canadian parliamentary committee in which he reiterated the central bank's view that an interest rate increase is less imminent. The Japanese yen rallied against the dollar and euro, rebounding from recent multi-year lows, after a G7 official said a statement by the group was meant to express concern about excessive movements in the Japanese yen. "We've seen a great deal of volatility in FX just given all of these contradictory, confusing messages coming out of the G7/G8/G20 ... contrary to their attempt to try and reduce volatility and provide more clarity in FX markets. They've managed to just complicate everything," said David Tulk, chief Canada macro strategist at TD Securities in Toronto. "The Canadian dollar is appreciating on the back of that ... on the back of the U.S. dollar weakening," he said. The currency erased early losses and was trading at C$1.0032 versus the U.S. dollar, or 99.68 U.S. cents midway through Tuesday's North American session, firmer than Monday's close at C$1.0043, or 99.57 U.S. cents. Carney, who is the incoming Bank of England governor, did say the Group of Seven wealthy nations must go into this weekend's G20 meetings forcefully pressing major emerging economies to adopt flexible foreign exchange rates. He also said it was critical that no G7 members use monetary policy to target exchange rates. On the domestic front, he said a weak jobs market is a factor behind Canada's decision to keep interest rates low, describing the country's 7 percent jobless rate as undesirably high. "They pretty much rehashed the MPR (Monetary Policy Report) line for line and did very little to ... illuminate anything too interesting as to the outlook for monetary policy in Canada," said Tulk. With the exception of sterling and the U.S. dollar, Canada was mostly weaker against other major currencies. The Canadian dollar, which has struggled in the wake of last Friday's reports that showed surprise job losses in January and lower-than-expected housing starts, was not far off two-week lows against the greenback. Canadian government bond prices were mixed, with the price of a two-year bond up less than half a Canadian cent to yield 1.115 percent and the benchmark 10-year bond down 9 Canadian cents, yielding 1.985 percent.