* C$ at C$1.0368 vs US$, or 96.45 U.S. cents * ECB holds rates at 1 percent * Bond prices lower across curve By Jon Cook TORONTO, June 6 (Reuters) - The Canadian dollar advanced against its U.S. counterpart on Wednesday as increased expectations that major central banks may embark on a wave of policy easing sparked a commodity rally, but momentum slowed after the European Central Bank left its key interest rate unchanged. The ECB resisted pressure to provide more support for the euro zone's ailing economy at its regular monthly policy meeting by holding its main interest rate steady at 1 percent. Market gains were further muted after ECB President Mario Draghi said there were increasing risks to economic recovery in the euro zone. Recent disappointing economic data from the United States and China, as well as signs the euro area slowdown is affecting core countries such as Germany, have built up pressure on the world's central banks to make some response. Commodities had rallied on the hopes the ECB would trim rates, with U.S. crude oil up more than $1 to $85.45. Gold rose more than 1 percent to $1,633.18 an ounce, its highest level in a month. Canada's dollar strengthened overnight to a six-day high at C$1.0311 versus the U.S. currency, or 96.98 U.S. cents. "It seems to just be on hopes of some form of quantitative easing from one of the major central banks," said Greg Moore, foreign exchange strategist at TD Securities. At 8:51 a.m. (1251 GMT), the Canadian dollar was at C$1.0368 against the greenback, or 96.45 U.S. cents, up slightly from Tuesday's close at C$1.0380 against the U.S. dollar, or 96.34 U.S. cents. Hopes of a resolution to Spain's banking crisis helped alleviate the ECB announcement. On Wednesday German officials said a deal is in the works that would allow Spain to recapitalise its stricken banks with aid from its European partners but avoid the embarrassment of having to adopt new economic reforms imposed from the outside. On Tuesday the Bank of Canada held its key interest rate at 1 percent. However, the statement was still more hawkish than many market players had expected, as the central bank did not remove the possibility of a rate increase further down the road should the Canadian economy maintain its momentum. "It's somewhat surprising that the reaction from just a general lift in risk assets moved the Canadian dollar about twice as much as the Bank of Canada did yesterday," said Moore. Moore added the currency, in the near term, was likely to hover between C$1.0260 and C$1.0450. After the ECB, focus shifts to U.S. Federal Reserve Chairman Ben Bernanke's testimony to the U.S. Congress on Thursday for signals of further stimulus measures. Canadian bond markets were lower across the curve. Canada's two-year bond fell 1.5 Canadian cents to yield 0.998 percent, while the benchmark 10-year bond dropped 13 cents to yield 1.755 percent.