CORRECTED - CANADA FX DEBT-C$ near 1-wk high, data spurs optimism

Thu Dec 23, 2010 12:40pm EST
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 (Corrects the headline and second paragraph to show the
Canadian dollar was at its highest level in early one week, not
three weeks)  
 * C$ hits high of 99.20 U.S. cents
 * Bond prices lower across curve
 * Canada GDP up 0.2 pct in October
 (Recasts, updates after data)
 By Claire Sibonney
 TORONTO, Dec 23 (Reuters) - Canada's dollar reversed
earlier losses against the U.S. currency on Thursday as
investors saw both domestic and U.S. economic data as
reinforcing signs of growth in the fourth quarter.
 The Canadian currency CAD=D4 rose as high as C$1.0081 to
the greenback, or 99.20 U.S. cents, its strongest level in
nearly a week.
 The Canadian economy grew 0.2 percent in October after a
brief downturn in September, due to an increase in mining and
oil and gas extraction activity. The figure was slightly below
analysts' calls for a 0.3 percent gain. [ID:nN23134993]
 "The Canadian number ... was not as high as expectation but
it was still an increase over the previous period, so it did
definitely give some confidence that things are moving along
well in Canada," said C.J. Gavsie, managing director of foreign
exchange sales at BMO Capital Markets.
 Also supporting Canada's risk-related currency, new U.S.
claims for jobless benefits dipped last week and consumer
spending increased in November for a fifth straight month,
while consumer confidence perked up in December, rising to its
highest level in six months. [ID:nN23135079]
 However, Gavsie noted that the currency was being driven by
relatively large orders from relatively few players in
pre-holiday trade.
 "Markets are definitely choppy to lead us out of the
month," he said. "There's a considerable amount of volume but
they tend to be lump sum orders that are coming in and press on
the markets all at once, rather than the regular cash flow type
of deals."
 At 11:15 a.m. (1615 GMT), the Canadian currency CAD=D4
was at C$1.0093 to the U.S. dollar, or 99.08 U.S. cents, up
from Wednesday's North American session close of C$1.0142 to
the U.S. dollar, or 98.60 U.S. cents.
 Canadian bond prices were mildly lower given the fairly
positive economic data, tracking U.S. Treasuries as dealers
prepared for new supply next week. [US/]
 The two-year bond CA2YT=RR was down 7 Canadian cents to
yield 1.703 percent, while the 10-year bond CA10YT=RR slipped
21 Canadian cents to yield 3.194 percent.
 In an interview published on Thursday, Finance Minister Jim
Flaherty told Reuters he took note of "great demand" for two
Canadian foreign-currency denominated bonds. [ID:nN23134240]
 (Reporting by Claire Sibonney; editing by Peter Galloway)