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* Canadian dollar climbs on U.S. auto aid hopes, oil price
* Bonds fall as investors pick stocks
TORONTO, Dec 10 (Reuters) - The Canadian dollar climbed against the U.S. dollar on Wednesday morning, supported by hopes for a rescue plan for ailing U.S. automakers and by higher oil prices.
Bond prices fell as investors stepped back into stocks.
At 9:35 a.m. (1435 GMT), the Canadian dollar was at C$1.2562 to the U.S. dollar, or 79.61 U.S. cents. That is up from C$1.2646 to the U.S. dollar, or 79.08 U.S. cents, at Tuesday's close. The Canadian currency was hit on Tuesday after the Bank of Canada cut its key interest rate by 75 basis points and declared for the first time that the economy is entering a recession.
The U.S. House of Representatives could vote as early as Wednesday on a $15 billion plan to bail out and restructure U.S. automakers. [ID:nLA99919] The hopes that the plan could be finalized helped boost global stock markets and the positive sentiment filtered through to commodity markets. It also helped cool risk aversion, which has been sparking safe-haven U.S. dollar buying.
"There is a little better tone from equity markets and risk aversion playing out in response to news of a tentative loan package for the Big Three automakers. And commodity prices are a little higher," said Sal Guatieri, senior economist at BMO Capital Markets.
Oil bounced above $44 a barrel after Tuesday's slump, [ID:nSIN422139] and the recovery lent support to the Canadian dollar, which has tracked the price of oil in the past few years because of Canada's status as a major oil-exporting nation.
Canadian bond prices were lower across the curve as stock markets gained and investors set aside fears of a global recession.
The Toronto Stock Exchange's main index opened higher on Wednesday, as did major U.S. exchanges, following the lead of stock markets in Europe and Japan, which were also supported by the U.S. automaker aid plan.
The two-year bond fell 8 Canadian cents to C$102.25 to yield 1.585 percent. The 10-year bond declined 40 Canadian cents to C$109.15 to yield 3.125 percent.
The yield spread between the two- and 10-year bond was at 152 basis points, down from 155 basis points at the previous close.
The 30-year bond lost 55 Canadian cents to C$121.25 to yield 3.775 percent. In the United States, the 30-year Treasury yielded 3.1106 percent. (Reporting by Ka Yan Ng; editing by Peter Galloway)