* C$ at C$0.9916 versus US$, or $1.0085
* Positive signs from China, UK help lift sentiment
* Investors still scratching heads about Bank of Canada
By Alastair Sharp
TORONTO, Oct 25 (Reuters) - The Canadian dollar strengthened
against its U.S. counterpart on Thursday, tracking commodity and
equity markets higher as signs of recovery in China and a bounce
out of recession in Britain helped lift global sentiment.
The resource-linked currency is sensitive to any clues that
global appetite is picking up, and may have for now set aside
Bank of Canada signals about the direction and timing of future
interest rate moves.
"It still seems to be a little bit confused and mixed in
terms of the signals we're getting from the Bank," said Shaun
Osborne, chief currency strategist at TD Securities.
The central bank has in the past week whipsawed the markets
with seemingly mixed messages on interest rates, before
concluding on Wednesday interest rates are still likely to rise,
but a slowing economy means higher rates have become "less
imminent."
"In the short term the market is more focused on the rebound
we've had in commodities and stock markets around the world
overnight," Osborne said.
Gold and oil both rose after recent dips, while Asian and
European equities were broadly positive.
At 8:14 a.m. (1201 GMT) the Canadian dollar was at
C$0.9916 to the greenback, or $1.0085, compared with C$0.9949,
or $1.0051, at Wednesday's North American close.
The British economy pulled out of recession in the third
quarter, boosted by the Olympics in London.
China said factory output should grow faster in the last
quarter than in the prior three months.
But Osborne said the optimism may be short-lived.
"The short term rebound we're seeing in risk at the moment
may well struggle to see much follow through," he said.
The two-year bond was off 7 Canadian cents to
yield 1.157 percent, while the benchmark 10-year bond
fell 44 Canadian cents to yield 1.898 percent.