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* C$ ends session at C$0.9827 to US$, or $1.0176
* Rally in oil, commodity prices fuel gains
* Bonds weaker across the curve; Canada mostly outperforms
By Trish Nixon
TORONTO, June 28 (Reuters) - The Canadian dollar strengthened against the U.S. currency on Tuesday, as optimism that Greece could find a way to avoid a debt default spurred buying of currencies with strong links to commodity prices.
World stocks jumped about 1 percent and the euro rallied on hopes an impending vote on Greece's budget and a France-led plan to roll over Greek debt will avert a full-blown euro zone debt crisis. [MKTS/GLOB]
"It seems as though the Greek austerity vote will probably get passed, which has been positive for the euro. So its risk on, so they are buying Canadian dollars on the back of that," said David Bradley, director of foreign exchange trading at Scotia Capital in Toronto.
The positive developments in Europe also spurred a rise in commodity and oil prices, which provided support for the Canadian dollar. [O/R]
The currency CAD=D4 ended the North American session at C$0.9827 to the U.S. dollar, or $1.0176, firmer than Monday's close of C$0.9867 to the U.S. dollar, or $1.0135.
Bradley said he expected the Canadian dollar to meet resistance around the C$0.9820 to C$0.9825 area and that in the near-term, fundamentals point toward Canadian dollar weakening.
"It looks like there is less of a chance that there's going to be an interest rate hike for the balance of the year, and economic data has been fairly soft out of the U.S., which should generally have a negative effect on the Canadian dollar," he said.
Higher interest rates tend to help a country's currency appreciate because they often attract international capital flows.
But Bradley said the Canadian dollar's near-term direction will ultimately depend on the outcome of tomorrow's vote in Greece and Canadian inflation data on Wednesday.
The Canadian data is expected to help ease lingering concerns that inflation might be rising too sharply and could pose a threat to the economy. [ID:nN1E75N0D8] ECONCA
Canadian bond prices were lower across the curve as investors fled the relative safety of government debt to dip back into riskier assets.
The two-year bond CA2YT=RR slipped 11 Canadian cents to yield 1.458 percent, while the 10-year bond CA10YT=RR gave back 75 Canadian cents to yield 2.99 percent.
Canadian bonds mostly outperformed U.S. Treasuries. The Canadian 10-year yield was 4.4 basis points below its U.S. counterpart, compared with 2.1 basis points on Monday. (Editing by Jeffrey Hodgson)