* C$ at C$1.0167 vs US$, or 98.39 U.S. cents * Rising expectations of a Bank of Canada rate hike underpin C$ * Jitters over central bank policy roil global markets again By Solarina Ho TORONTO, June 13 (Reuters) - The Canadian dollar gained against its U.S. counterpart on Thursday as a spate of encouraging economic data helped stoke bets on a sooner-than-expected interest rate hike in Canada. "People are starting to factor in rate increases in Canada again, which has helped, but we're not really pushing any new ground at the moment," said Shaun Osborne, chief currency strategist at TD Securities. At 10:08 a.m. (1408 GMT) the Canadian dollar strengthened about 0.4 percent, trading at C$1.0167 to the greenback, or 98.36 U.S. cents, compared with C$1.0212, or 97.92 U.S. cents, at Wednesday's North American close.$1.0225. But the Canadian dollar was expected by some to trade in a narrow range. Osborne said the loonie, as Canada's currency is colloquially known, would likely not strengthen beyond the C$1.0150 level it reached earlier in the session and would also find buying interest around C$1.0225. Earlier on Thursday, the Canadian government reported that industrial capacity usage, particularly in mining, oil and gas extraction, rebounded in the first quarter from a weak second half of 2012, and housing prices rose more than expected. These reports mirrored a trend of improving Canadian economic data, which included a blockbuster gain in employment in May and stronger housing data. Overnight index swaps, which trade based on expectations for the central bank's key policy rate, have risen recently as solid economic data has led some investors to bet on a rate hike sooner than previously expected. A Reuters poll on May 23 showed most economists don't expect the Bank of Canada to hike rates until the fourth quarter of 2014 due to tepid economic growth and low inflation. The two-year bond was up 2 Canadian cents to yield 1.160 percent, while the benchmark 10-year bond rose 20 Canadian cents to yield 2.189 percent.