* C$ at C$0.9980 vs USD, or $1.0020 * Stronger-than-expected European data supports * Political uncertainty in Spain, Italy still weighs * C$ strongest against yen since mid-2010 By Solarina Ho TORONTO, Feb 5 (Reuters) - Canada's dollar notched marginal gains against its U.S. counterpart on Tuesday, helped by better-than-expected euro zone data, but the currency remained under pressure as political uncertainty in Spain and Italy weighed. Euro zone data showed the region's services sector improved more than expected last month. However, investors were uneasy with Spain's ruling party, which is caught in a corruption scandal that threatens the prime minister's credibility and his fight to get the economy back on track. Meanwhile, Italian polls showed former prime minister Silvio Berlusconi regaining ground ahead of elections this month. "Overall we're taking our cues from some of the concerns over in Europe ... I think anytime there's a negative tone in the global markets, Canada does tend to lose a little bit of ground," said Don Mikolich, executive director, foreign exchange sales at CIBC. "It has people thinking that we could see a retest above par. The C$1.0050 area had been the previous high. I think that's a potential target over the next little bit," Mikolich said. At 8:31 a.m. (1331 GMT), the Canadian dollar was trading at C$0.9980 to the U.S. dollar, or $1.0020, not far from Monday's North American session close of C$0.9986, or $1.0014. Earlier, it touched C$0.9995, or $1.0005. The currency was likely to trade between C$0.9950 and C$0.9990 on Tuesday, according to an RBC research note. Against other currencies, the Canadian dollar was mostly stronger. It hit its strongest level against the Japanese yen since mid-2010, as some Japanese companies stepped up hedging against further weakness on expectations of more aggressive easing by the Bank of Japan. It also firmed to C$1.3441 against the euro, its strongest level since Jan. 25. Canadian government bond prices fell across the curve, with the two-year Canadian government bond easing 4 Canadian cents to yield 1.176 percent and the benchmark 10-year bond sliding 35 Canadian cents to yield 2.025 percent.