* Canadian dollar at 7-week peak against greenback
* Investors await details of U.S. bailout plan
* Bond prices rise as Canada seen as safe haven
By John McCrank
TORONTO, Sept 22 (Reuters) - The Canadian dollar rose to its highest level in seven weeks against a besieged U.S. dollar on Monday, fueled by uncertainty about the $700 billion bailout plan for the stumbling U.S. financial sector and how it weigh on the U.S. balance sheet.
Canadian bond prices rose in a safe-haven bid as investors fled U.S. assets.
The Canadian dollar ended the North American session at C$1.0334 to the U.S. dollar, or 96.77 U.S. cents, up from C$1.0500 to the U.S. dollar, or 95.24 U.S. cents, at Friday's close.
The currency hit its highest level against the greenback since Aug. 4, up 1.6 percent, for its biggest one day rise since Aug. 21.
The greenback weakened as investors waited to see just how much the U.S. government is going to pay for the so-called toxic assets clogging the U.S. financial system.
The crisis has led to the collapse of two of the top five U.S. investment banks, the sale of another, and the other two converting to holding companies. See [ID:nSP4331]
"There is always the concern that the (U.S.) government is taking on more debt than it can handle and, ultimately, if that debt gets too large, it would have to resort to the printing press, which would create inflation in the U.S. and devalue the (U.S.) dollar," said Sal Guatieri, senior currency strategist at BMO Capital Markets.
Commodity markets were higher as investors getting out of U.S. dollar positions looked for firm assets.
U.S. crude oil CLc1 had its biggest one-day gain on record, soaring 15.7 percent to $120.92 per barrel. See [ID:nSYD356880], while spot gold XAU= rose above $900 an ounce. See [ID:nN22420883]
Matthew Strauss, senior currency strategist at RBC Capital Markets said the next few days would be very telling for the U.S. dollar-Canada currency pair, and could point to the Canadian dollar once again hitting parity with the greenback.
"If we are going to enter into a renewed period of U.S. dollar weakness, dollar-Canada could very well revert back to the eight-month range that prevailed before mid-July, from basically 98 Canadian cents to C$1.03" to the U.S. dollar.
Canadian bond prices benefited from a flight out of U.S. assets, including the greenback, amid inflation concerns in the United States.
"Canada right now looks like a safe harbor, given our fairly strong economic fundamentals," said BMO's Guatieri.
The two-year bond rose 7 Canadian cents to C$99.79 to yield 2.849 percent, while the 10-year bond added 18 Canadian cents to C$104.68 to yield 3.670 percent.
The yield spread between the two-year and 10-year bond was 84.2 basis points, up from 79.4 basis points at the previous close.
The 30-year bond gained 60 Canadian cents to C$114.95 for a yield of 4.107 percent. In the United States, the 30-year treasury yielded 4.390 percent.
The three-month when-issued T-bill yielded 2.27 percent, unchanged from the previous close. (Reporting by John McCrank; editing by Rob Wilson)