* C$ moves comfortably off overnight low
* Flaherty comments cap C$ rise
* Bond prices pinned lower across curve (Recasts)
By Frank Pingue
TORONTO, Aug 5 (Reuters) - Canada's dollar erased an early slide and closed higher versus the greenback on Wednesday as hopes for improvement in the global economy helped to ignite greater appetite for riskier assets.
The turnaround in the currency, which began just before the midway point of the North American session, capped a skid that began immediately after Canadian Finance Minister Jim Flaherty said on Tuesday that steps could be taken to slow the Canadian dollar's ascent. [ID:nN04143584]
Undermining Flaherty's remarks was the increasingly deeply rooted view that the worst of the world recession is over, which is dampening the safe-haven appeal of the U.S. dollar as traders opt to move back into riskier currencies and assets.
"There's just been a little bit of risk acceptance and (U.S.) dollar negativity on that," said Tyson Wright, senior foreign exchange trader Custom House, a currency services firm in British Columbia.
"But at the same time we are really hitting a brick wall just under C$1.07 ... and that's to do with Flaherty comments being a little bit of an overhang on the market."
The Canadian unit closed at C$1.0701 to the U.S. dollar, or 93.45 U.S. cents, up from C$1.0745 to the U.S. dollar, or 93.07 U.S. cents, at Tuesday's close.
That was also well above a low reached early on Wednesday of C$1.0785 to the U.S. dollar, or 92.72 U.S. cents, and not far from a session high of C$1.0678 to the U.S. dollar, or 93.65 U.S. cents.
The latest U.S. data showed private-sector employers cut more jobs than expected in July while the services sector shrank. But the total number of jobs lost was fewer than in June and gave the market hope that Friday's U.S. jobs data will show improvement in the labor market. [ID:nN05240699]
"People are looking to the future and think that things have bottomed at this point and that from here on in stocks are generally going to move up and therefore it's time to move back into currencies and riskier assets," Wright said.
Respondents in a Reuters poll released on Wednesday said Canada's currency will back away from the 10-month high it reached early on Tuesday due to talk of central bank intervention and possible U.S. interest rate hikes. [ID:nN05249342]
BONDS PRICES DOWN
Canadian bond prices ended down across the curve, adding to losses recorded in the previous session, as European data helped further hopes that global recovery is gaining steam and pulled investors away from safe-haven government debt.
Reports showed the deep recession in the euro zone services economy eased in July, while Britain's services sector posted an unexpected surge in the same month, fueling hopes the economy might have started growing again. [ID:nLAG003649]
The next Canadian data that may influence bond prices are building permits figures for June, due out on Thursday.
The marquee Canadian data for the week will arrive Friday, when the July jobs report is released. The data is expected to show the economy shed 17,500 jobs, while the unemployment rate rose to 8.6 percent
The two-year Canadian bond ended down 6 Canadian cents at C$99.04 to yield 1.473 percent, while the 10-year bond lost 48 Canadian cents to C$101.32 to yield 3.588 percent.
The 30-year bond fell 90 Canadian cents to C$115.50 to yield 4.064 percent. In the United States, the 30-year Treasury yielded 4.560 percent.
Canadian bonds outperformed U.S. Treasuries across the long end of the curve. The Canadian 30-year bond was about 49.6 basis points below the U.S. 30-year yield, compared with about 44.9 basis points below on Tuesday. (Editing by Peter Galloway)