CANADA FX DEBT-Canadian dollar in recovery mode ahead of CPI

* C$ up at C$0.9747 vs US$, or $1.0260
    * Bond prices little changed across the curve

    By Claire Sibonney
    TORONTO, Sept 21 (Reuters) - Canada's dollar firmed slightly
against its U.S. counterpart on Friday ahead of domestic
inflation data for August, as investors moved back into riskier
assets still feeling the benefits of stimulus measures from
global central banks. 
    U.S. stock futures were in positive territory, while
European shares and the euro also clawed back up. 
    Meanwhile, oil rebounded from a 1-1/2 month low, lending
further support to Canada's commodity-linked currency. 
    "It just seemed to be a general short-term recovery in risk
into the end of the day and early part of the overnight and
London session," said Matt Perrier, a director of foreign
exchange sales at BMO Capital Markets.
    "Dollar/Canada is kind of settling comfortably to where it's
been on average for most of the week here heading into the
inflation numbers and we should take a minor queue from it."
    Canada's annual inflation report, due at 8:30 a.m. (1230
GMT), likely remained benign in August despite a run-up in
gasoline prices in the month, leaving the central bank free to
focus on fostering growth rather than fending off price
pressures through rate hikes. 
    The median forecast in a Reuters poll is for the consumer
price index to climb 0.3 percent in the month for an annual rate
of 1.3 percent, unchanged from July.
    At 8 a.m., Canada's dollar stood at C$0.9747 versus
the U.S. dollar, or $1.0260, stronger than Thursday's North
American session close at C$0.9765 to the U.S. dollar, or
    Perrier noted key levels to watch on Friday around C$0.9725
and C$0.9795.
    Helping the upbeat mood were signs that Spain is slowly
moving towards requesting financial assistance. The government
is considering freezing pensions and speeding up a planned rise
in the retirement age to meet conditions for aid, sources with
knowledge of the matter told Reuters. 
    Markets seemed to brush a well-flagged report from Britain
showing its plans to bring down its deficit have fallen behind
target as the European debt crisis has hit global growth.
    It followed Italy's warning late on Wednesday that its
recession will be far more severe than forecast, making it
harder to reduce the country's debt burden. 
    Canadian government bond prices were little changed across
the curve. The two-year bond was flat, yielding 1.142
percent, while the benchmark 10-year bond was off 4
Canadian cents, yielding 1.862 percent.