Canadian dollar gets boost from higher oil prices
* Higher commodity prices lending support to currency
* Stock markets likely to play factor in dollar's moves
* Bond prices mostly flat ahead of stock market open
By Frank Pingue
TORONTO, Sept 10 (Reuters) - The Canadian dollar rose slightly versus the U.S. dollar on Wednesday given a slight rebound in commodity prices and overseas stock market losses that were much lighter than in North America.
Domestic bond prices, with no key domestic economic data to influence a move, were flat and clinging to slim gains on the short end of the curve following a quarterly loss reported by U.S. investment bank Lehman Brothers.
At 8:15 a.m. (1215 GMT), the Canadian unit was at C$1.0703 to the U.S. dollar, or 93.43 U.S. cents, up from C$1.0706 to the U.S. dollar, or 93.41 U.S. cents, at Tuesday's close.
The Canadian currency was supported by a rise in oil prices after a meeting of the Organization of the Petroleum Exporting Countries agreed to an unexpected production cut.
Since Canada is a key oil exporter, its currency is often influenced by price moves in the commodity.
Another boost for the Canadian dollar were losses on equity markets in Asia and Europe that were much less than the losses on North American markets from Tuesday.
During the overnight session the Canadian dollar recouped a chunk of its recent losses and rallied as high as C$1.0658 to the U.S. dollar, or 93.83 U.S. cents.
"The strength came from two aspects, the most important being a slight rebound in commodity prices," said Matthew Strauss, senior currency strategist at RBC Capital Markets.
"We also saw the stock markets in Asia and Europe not following the U.S. markets all the way down. Although they closed in negative territory, it's much more muted than the losses on the U.S. equity side."
Plenty of attention will be directed to the Toronto Stock Exchange after it fell 487.88 points on Tuesday and has fallen almost 20 percent from the record high reached in June.
BOND PRICES FLAT
Canadian bond prices were a touch higher on the short end of the curve as a lack of data left dealers to focus on the bigger-than-expected quarterly loss by Lehman Brothers.
Also offering some support to bond prices was the U.S. government's bailout over the weekend of mortgage finance companies Freddie Mac and Fannie Mae.
"Today is an awfully slow day from an economic perspective so I think the market is going to dwell some more on the Fannie and Freddie developments and on Lehman," said Eric Lascelles, chief economics and rates strategist at TD Securities.
The two-year bond rose 1 Canadian cent to C$100.10 to yield 2.703 percent, while the 10-year was off 5 Canadian cents at C$106.50 to yield 3.455 percent.
The yield spread between the two-year and 10-year bond was 76.8 basis points, unchanged from the previous close.
The 30-year bond was off 5 Canadian cents at C$118.20 for a yield of 3.936 percent. In the United States, the 30-year Treasury yielded 4.187 percent.
The three-month when-issued T-bill yielded 2.40 percent, down from 2.42 percent at the previous close. (Editing by Scott Anderson)
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