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* Canadian dollar gains 0.9 percent versus greenback
* Canada inflation eases sharply in October
* Bonds unwind as stock market rally stalls safe-haven bid
By John McCrank
TORONTO, Nov 21 (Reuters) - The Canadian dollar rose 0.9 percent against the U.S. dollar on Friday as global equity markets rebounded from the previous day's sharp losses, boosting prices for the commodities Canada exports.
Canadian bond prices unwound some recent gains as the rally in stocks cut into bids for relatively stable government debt.
At 10:00 a.m. (1500 GMT), the Canadian dollar was at C$1.2816 to the U.S. dollar, or 78.03 U.S. cents, up from C$1.2935 or 77.31 U.S. cents at Thursday's close.
The currency slipped to C$1.2990, or 76.98 U.S. cents, in the overseas session, but turned around as stocks in Asia and Europe rose as investors tip-toed back into riskier assets.
"That development, i.e. the higher levels in equity markets, has allowed the commodity markets to register some gains," said George Davis, chief technical strategist at RBC Capital Markets in Toronto.
The Reuters-Jefferies CRB index .CRB, a global commodities benchmark that tracks 19 futures markets and has a bias to oil, was up a little over 0.5 percent after falling to its lowest since July, 2003, due to slumping global demand.
Canada is a major commodities exporter and developments like the decline of U.S. crude oil CLc1 to below $50 a barrel from a peak of over $147 in July have weakened Canada's dollar while giving a boost to the greenback.
Evidence of the softer crude prices showed up in Canadian inflation data for October on Friday, with consumer prices posting their largest decline in almost 50 years, largely due to lower gasoline prices.
Canada's annual inflation rate in October eased more than expected to 2.6 percent from 3.4 percent in September. Analysts in a Reuters poll had forecast a rate of 3.1 percent.
Canadian bond prices unwound some recent gains as the rally in stocks ate into the safe-haven bid that had been supporting demand for government debt.
"It's very much the stock story right now, but the prospects for higher bond prices are there," said Michael Gregory, senior economist at BMO Capital Markets in Toronto.
He said deteriorating economic conditions will most likely lead central banks to cut benchmark interest rates further, which is supportive of higher bond prices.
The Canadian overnight Libor rate LIBOR01 was 2.4833 percent, down from 2.500 percent on Thursday.
Thursday's CORRA rate CORRA= was 2.2437 percent, up slightly from 2.2413 percent on Wednesday. The Bank of Canada publishes the previous day's rate at around 9 a.m. daily.
The two-year bond fell 11 Canadian cents to C$101.81 to yield 1.837 percent. The 10-year bond slid 70 Canadian cents to C$106.50 to yield 3.442 percent.
The yield spread between the two-year and 10-year bond was 166 basis points, down from 172 at the previous close.
The 30-year bond shed 95 Canadian cents to C$117.05 to yield 3.993 percent. In the United States, the 30-year Treasury yielded 3.616 percent. (Editing by James Dalgleish)