CANADA FX DEBT-C$ rises in a catch-up rally as oil gains

Tue Oct 11, 2011 4:36pm EDT
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 *C$ ends at C$1.0279 vs US$, or 97.29 U.S. cents
 *Bond prices track U.S. Treasuries lower
 (Updates to close)
 By Claire Sibonney
 TORONTO, Oct 11 (Reuters) - The Canadian dollar rose nearly
a penny against the U.S. dollar on Tuesday, riding higher on
stronger oil prices and catching up with a risk rally on
Monday, when most Canadian markets were closed for a holiday.
 U.S. crude futures ended higher for a fifth straight
session as equities recovered from a weak start and investors
awaited a key vote in Slovakia on the euro zone's rescue fund.
 News that U.S. authorities broke up an alleged plot to bomb
Israeli and Saudi Arabian embassies in Washington and
assassinate the Saudi ambassador added a further boost to oil
prices, brokers said.
 "Markets overall are more or less consolidating after their
gains yesterday ... but commodity prices have had a big jump in
the past couple sessions, which has helped support the Canadian
dollar," said Douglas Porter, deputy chief economist at BMO
Capital Markets.
 World stocks and commodities climbed on Monday after
Germany and France pledged to come up with a plan by the end of
the month to tackle Greece's debt woes and recapitalize
European banks.
 The Canadian dollar CAD=D3 closed the North American
session at C$1.0279 against the U.S. dollar, or 97.29 U.S.
cents, up from Friday's North American session close of
C$1.0383 to the U.S. dollar, or 96.31 U.S. cents.
 "The Canadian dollar is very much a product of this global
risk-on, risk-off type of environment," said Carlos Leitao,
chief economist at Laurentian Bank of Canada in Montreal,
 Data that showed Canadian housing starts rebounded sharply
in September also encouraged the currency. [ID:nN1E79A06J]
 Bond prices drifted lower across the board, tracking U.S.
Treasuries, as fears about Europe's debt crisis receded after
most euro zone countries voted to expand the region's bailout
fund. [US/]
 The two-year Canadian government bond CA2YT=RR lost 5
Canadian cents to yield 0.989 percent, while the 10-year bond
CA10YT=RR dropped 55 Canadian cents to yield 2.301 percent.
 (Reporting by Claire Sibonney; editing by Peter Galloway)