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* C$ closes at C$0.9897 vs. $US, or $1.0104 * C$ touches intraday high of C$0.9843, or $1.0160 * Bond prices mixed By Solarina Ho TORONTO, Aug 21 (Reuters) - The Canadian dollar pulled back from three-and-a-half-month highs against its U.S. counterpart on Tuesday as the currency failed to sustain earlier gains on the back of higher global equities, commodity prices and commodity-driven currencies. "It started off with the risk-on appetite emanating from what happened with Australia and the European debt talks. That put some ample moves into non-U.S. trading," said C.J. Gavsie, managing director of foreign exchange sales at BMO Capital Markets, adding that bullish moves in oil also contributed to gains. "As we saw Europe go home and we lost the trading out of London, the North American aspects have taken over," said Gavsie, adding that profit-taking from short USD/CAD positions was a factor. The Australian and New Zealand dollars firmed after the Reserve Bank of Australia sounded content with policy where it was, while talk of stimulus measures in regional powerhouse China underpinned risk appetite. Meanwhile, the euro rallied amid speculation the European Central Bank will take strong action to ease Spanish and Italian borrowing costs. U.S. crude futures hit a three-month peak above $97 a barrel on the ECB hopes, tensions in the Middle East and as the September crude contract approached expiration. The Canadian dollar hit an intraday high of C$0.9843 versus the U.S. dollar, or $1.0160, its firmest level since May 3, but closed at C$0.9897, or $1.0104, weaker than Monday's North American session close at C$0.9884, or $1.0117. Camilla Sutton, chief currency strategist at Scotiabank, cautioned that near term, the currency's recent surge could be overdone. "Anything we measure it against, all the fundamental drivers for CAD are positive for CAD which is good. However, if we look at it on any of the charts, it has really overstepped its rally," she said. Wednesday's Canadian retail sales data, comments from Bank of Canada's Mark Carney who is speaking to the Canadian Auto Workers union and the U.S. Federal Reserve's FOMC minutes will all be in focus, though major swings in the Canadian dollar are not expected. "(Carney)'s going to probably going suggest the Canadian dollar is at relatively stronger levels than where they'd like it. They'd like to see it closer to parity or on the weaker side of parity to the U.S. dollar," said BMO's Gavsie, adding that the domestic news was mostly priced into the currency and that he expected to see it trend toward the low C$0.99 level. Canadian bond prices were mixed across the curve, with the two-year bond up half a Canadian cent to yield 1.188 percent, and the benchmark 10-year bond gaining 2 Canadian cents, to yield 1.935 percent.