* Canadian dollar at C$0.9786 to the US$, or $1.0219 * Hit by IMF report on slowing global growth * China stimulus hopes, higher oil prices provide support By Alastair Sharp TORONTO, Oct 9 (Reuters) - Canada's dollar gave up early gains against its U.S. counterpart on Tuesday as a warning about slowing global growth from the IMF weighed on the currency, offsetting a boost from rising oil prices and bets that China will move to kick-start demand. The International Monetary Fund said the global economic slowdown is worsening, and cut its growth forecasts for the second time since April. The IMF also warned U.S. and European policymakers that failure to fix their economies' ills would prolong the slump. "When the IMF comes out and revises down global growth it can lead to a weaker Canadian dollar because global investors view Canada as an export-heavy, commodity-heavy economy," said Craig Alexander, chief economist at Toronto-Dominion Bank. "The Canadian economy is leveraged to the global business cycle." At 12:26 p.m. (1626 GMT) the Canadian dollar traded at C$0.9786 to the U.S. dollar, or $1.0219, slightly stronger than its Friday close of C$0.9789, or $1.0216. Most Canadian currency traders were away from their desks on Monday for the Canadian Thanksgiving holiday. Canadian government bond prices also reversed course as investors sought safer assets, with the two-year bond rising 1 Canadian cent to yield 1.133 percent, while the benchmark 10-year bond added 10 Canadian cents to yield 1.796 percent. The Canadian currency's weakness was limited by an injection of more cash into China's money markets by the country's central bank, which encouraged expectations that the world's second largest economy would take further steps to spark growth. Oil prices also offered support. Oil rose to around $113 a barrel on Tuesday after two days of losses, with tensions in the Middle East and the risk of supply disruptions outweighing concerns about sluggish global demand. Canada is a major oil exporter, and rising energy prices tend to support its currency. Some analysts said there was a sense in the market that there was little new in the IMF report, and that its impact might not last long. "It's a hope that the global economy is not getting worse, that's what the view of the market is," said Charles St-Arnaud, Canadian economist and currency strategist at Nomura Securities in New York. "The IMF is behind the curve, everyone knows the global economy is slowing, and I think there was some relief that the downgrade was in line with what markets were expecting," he said. Toronto-Dominion's Alexander also suggested the setback may be short-lived. "The question is really how long that negative assessment lasts and I would suggest the next data point that is strong will be more than enough to offset any impact from the IMF report," he said.