CANADA FX DEBT-C$ strongest since May 18 on recovery hopes
* C$ rises to 96.67 U.S. cents
* Strong Aussie data plus New Zealand rate hike help mood
* Bank of Canada's Carney: too soon to gauge Europe impact
* Bond prices sag as safe-haven bid cools (Adds details on Carney speech, quotes, updates C$ price, bond prices, adds Canadian economic data details)
By John McCrank
TORONTO, June 10 (Reuters) - Canada's dollar rose to its highest point against the greenback in more than three weeks on Thursday after a bullish report on Chinese exports in May increased hopes for global economic recovery and pushed up commodity prices.
Chinese exports surged 48.5 percent in May over a year earlier, well above forecasts for a 32 percent gain, confirming a Reuters report from Wednesday. [ID:nTOE65901X]
"On the back of that, we saw commodity prices rise with oil up (around) $75 a barrel," said Matthew Strauss, senior currency strategist at RBC Capital Markets. [ID:nSGE659083]
Canada is a major exporter of commodities and is the biggest oil supplier to the United States.
"So the Canadian dollar is benefiting from that as well as the general move out of the U.S. dollar," Strauss said.
He added that the Canadian dollar was outperforming the yen and the greenback, both of which are seen as safe-haven currencies, where investors seek refuge when the economic mood sours.
At 12:10 p.m. the Canadian dollar was at C$1.0344 to the U.S. dollar, or 96.67 U.S. cents, up from Wednesday's North American finish of C$1.0443 to the U.S. dollar, or 95.76 U.S. cents. It was the currency's highest level since May 18.
The Canadian dollar was trading one-for-one with the greenback through much of April as the global economy appeared to be on the mend and Canada's economic fundamentals looked the strongest in the G8.
But the sovereign debt situation in Europe put a heavy dose of fear back into the markets, pushing up the U.S. dollar and sending commodity prices lower.
As a result, the Canadian dollar hit a low of C$1.0851, or 92.16 U.S. cents, on May 25, but has been slowly gaining ground as the concerns about Europe eased and the global recovery was seen as gaining momentum.
Bank of Canada Governor Mark Carney told reporters after a speech in Montreal on Thursday that it was too early to gauge how recent euro zone concerns might affect Canada's economy. [ID:nN10199122] [nN10517170]
In his speech, he urged the G20 to push ahead quickly with "radical" financial reforms but signaled flexibility on when new global banking rules would be phased in.
"His comments are really not off target with respect to what we've heard not only from him, his department, as well as (U.S. Federal Reserve Chairman Ben) Bernanke," said Jack Spitz, managing director of foreign exchange at National Bank Financial.
Elsewhere on Thursday, a robust employment report out of Australia helped cheer market sentiment, as did a move by New Zealand's central bank to lift interest rates from a record low, its first hike since the global economic crisis. [ID:nSGE6580KR] [ID:nSGE65904N]
Spitz added that better than expected data in Sweden, a solid bid on a Spanish three-year bond auction, and comments from China on betting on a rise in the euro, added to the bullish market environment.
That helped push the Dow Jones industrial average .DJI up more than 2 percent and the Toronto Stock Exchange's S&P/TSX composite index .GSPTSE up more than 1 percent.
"So, for the moment at least, the market is benefiting from a 'risk on' sentiment, but that's something that could change quite fast and quite easily," Spitz said.
CANADIAN BOND PRICES FALL
Canadian bond prices were lower across the curve as the rise in stock markets cooled investors' demand for the safety of government debt.
The two-year government bond CA2YT=RR fell 14 Canadian cents to yield 1.794 percent, while the 10-year bond CA10YT=RR fell 45 Canadian cents to yield 3.408 percent.
On the domestic data front, Canada recorded a smaller than expected trade surplus in April due to the strong Canadian dollar. [ID:nN10210970]
Other numbers showed continued strength in Canada's housing sector, with new home prices up for a 10th consecutive month, but the pace is expected to cool in the second half of the year as new taxes take a toll.
Neither report is usually considered a market mover. (Editing by Peter Galloway)
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