CANADA FX DEBT-C$ outperforms on rate hike expectations

* C$ at C$0.9841 vs US$, or $1.0162
    * Canada strengthens against currency crosses
    * Bond prices little changed across curve

    By Jennifer Kwan	
    TORONTO, May 3 (Reuters) - Canada's dollar climbed against
its U.S. counterpart on Thursday and outperformed the G10
currencies on lingering expectations of an interest rate hike,
while firmness in equity markets indicated that investors were
in a buying mood.	
    The currency got a lift from the trend overseas that saw
European shares up as investors waited to see if a gloomier
economic outlook would prompt the European Central Bank to hint
at further stimulus measures following its policy meeting.
    Canada outperformed against major currencies on ramped-up
expectations of a Bank of Canada rate hike.  The central bank
surprised investors last month with a more positive domestic
economic outlook and an explicit warning that it may have to
start raising rates again from its current 1 percent.
    "If you take a look at the currency landscape the Canadian
dollar is an outperformer," said Jack Spitz, managing director
of foreign exchange at National Bank Financial.	
    "Canada has more or less held gains since the Bank of
Canada. There's a myriad of reasons why one would want to buy
Canada from a relative value perspective looking at the
economics, the hawkish stance by the bank," he added. 	
    "The underlying bid to commodity prices, the higher equity
prices and the whole buy North America, sell Europe and Asia."	
    Canada's dollar strengthened against commodity-linked New
Zealand and Australian dollars, the euro as well as the Japanese
    At around 8:10 a.m. (1210 GMT), the Canadian currency
 was at C$0.9841 against the greenback, or $1.0162, up
slightly from its Wednesday finish at C$0.9865 against the
greenback, or $1.0137.	
    Still market strategists said there are risks to the
downside. Economic reports have been mixed in recent weeks,
giving investors no clear signal on the strength of the North
American economic recovery. As well, flare-ups in the European
debt crisis have given traders pause. 	
    Spitz expects the currency to trade in a tight range of
C$0.9800 to C$0.9900 against the greenback over the next few
    All eyes will be on key U.S. jobs data due on Friday.	
    Non-farm payrolls data is expected to show hiring by U.S.
employers rebounded in April, which could ease fears that the
economy has stumbled into a soft patch. 	
    Businesses outside the farm sector are expected to have
added 170,000 jobs last month, according to a Reuters survey,
after rising a meager 120,000 in March. The unemployment rate is
seen holding at a three-year low of 8.2 percent. 	
    Canadian bond prices were little changed across the curve
with Canada's two-year bond unchanged to yield 1.316
percent, while the benchmark 10-year bond was up 3
Canadian cents to yield 2.104 percent.