* C$ rises 1.7 percent off low near 80 U.S. cents
* Ongoing appetite for risk cited for C$ rally
* Bond prices down as North American equities jump (Recasts)
By Frank Pingue
TORONTO, Feb 4 (Reuters) - The Canadian dollar was higher versus the U.S. dollar on Wednesday morning as traders felt comfortable taking on riskier assets following a choppy overnight session that saw big swings in the currency.
A rally in equities and U.S. data that came in better than expected paved the way for the Canadian currency to move higher, but market analysts were not predicting the start of a renewed rally in the Canadian dollar, which remains down about 0.45 percent in 2009.
"I think the overall market remains bearish and the outlook for both the U.S. and global economy remains highly uncertain," said Matthew Strauss, senior economist at RBC Capital Markets. "And I think any period of risk appetite in this environment will we relatively shallow and short-lived."
At 10:20 a.m. (1520 GMT), the Canadian unit was at C$1.2235 to the U.S. dollar, or 81.73 U.S. cents, up from C$1.2301 to the U.S. dollar, or 81.29 U.S. cents, at Tuesday's close.
That was 1.7 percent above a low reached about two hours earlier.
Data from the United States showed the reduction in private-sector jobs for January was not as grave as analysts had predicted. [ID:nN04508901]
Taking the blame for knocking the Canadian dollar down to an early low was continued uncertainty about the global economy, which convinced traders to unload riskier assets.
Uncertainty around the U.S. stimulus package and news that Fitch downgraded Russia's long-term foreign debt and local currency ratings had prompted a move to the greenback and yen, both considered safe-haven plays.
"Specifically related to Canada, once again it's been a follower rather than a leader. The bid in dollar/Canada really came in conjunction of the widespread bid for U.S. dollars and Japanese yen," said Jack Spitz, managing director of foreign exchange at National Bank of Canada.
The gains in the Canadian dollar, however, are being taken with a grain of salt as key domestic jobs data due at the end of the week is expected to show the economy shed 40,000 jobs in January after losing 34,400 in December.
Canadian bond prices were down across the curve as dealers considered the potential impact of U.S. government fiscal stimulus plans that will aim to combat the worst financial crisis since the Great Depression.
Investors also felt more comfortable moving into equities as Toronto's key index was up about 1.5 percent at mid morning while the Dow Jones industrial average was up 0.8 percent.
"There's a little more optimism and hope that this bailout package in the U.S. will be effective and that will give the (U.S.) economy the boost it needs and that's going to help stocks and hurt bonds," said Benjamin Reitzes, economist at BMO Capital Markets.
But the drop in bond prices was cushioned ahead of Friday's Canadian jobs figures for January, which are expected to show the economy bled more jobs and support calls for another Bank of Canada rate cut in March. Last month the central bank lowered its key overnight rate to a 50-year low of 1.00 percent.
Other Canadian data due this week include building permits for December and January's Ivey Purchasing Managers Index, both due on Thursday.
The two-year bond was down 1 Canadian cent at C$102.54 to yield 1.333 percent, while the 10-year bond dropped 46 Canadian cents to C$109.01 to yield 3.127 percent.
The 30-year bond dropped 90 Canadian cents to C$120.55 to yield 3.807 percent. In the United States, the 30-year treasury yielded 3.711 percent. (Additional reporting by Ka Yan Ng; editing by Peter Galloway)