CANADA FX DEBT-C$ rallies as US$ slumps on Fed, Bernanke comments

* C$ at C$1.0418 vs US$, or 95.99 U.S. cents
    * Fed cools taper talk, Bernanke more dovish than expected
    * Globe markets rally
    * Bond prices rise across curve

    By Solarina Ho
    TORONTO, July 11 (Reuters) - The Canadian dollar on Thursday
strengthened by as much as two cents against its U.S.
counterpart, which tumbled after the Federal Reserve indicated
it may not be as ready to pull back its stimulus measures as
markets had predicted.
    Shares and bonds rallied globally, while the U.S. dollar
fell sharply as markets reassessed when the U.S. central bank
would wind down its asset purchase program.  
    "Markets pretty much rallied globally. That put a bid on
everything non-U.S. dollar. Greenback weakened across the
board," said Benjamin Reitzes, senior economist and foreign
exchange strategist at BMO Capital Markets.
    Fed Chair Ben Bernanke said in a speech after markets closed
on Wednesday that "highly accommodative policy is needed for the
foreseeable future," adding the U.S. unemployment rate may be
overstating the health of the labor market.
    In minutes released earlier on Wednesday, about half of the
Fed's policymakers felt the bond-buying measure should be
brought to a halt by year end when they met in June, but many
wanted reassurance the U.S. jobs recovery was on solid ground
before any policy retreat. 
    "Bernanke didn't give us any new information. He's doing his
best to tell markets tapering (quantitative easing) QE and
ending QE is not the same thing as raising rates. I think that's
something the markets really haven't been able to grasp
entirely," said Reitzes.
    At 9:38 a.m. (1338 GMT), the Canadian dollar was
trading at C$1.0418 versus its U.S. counterpart, or 95.99 U.S.
cents, sharply higher than Bank of Canada's posted close at
C$1.0518, or 95.08 U.S. cents.
    The Canadian dollar, which was outperforming most other
major currency counterparts, had touched as high as C$1.0326
earlier in the session, its strongest level in three weeks.
    In Canada, the Bank of Canada is expected to keep its
tightening bias in the first interest rate decision under new
Governor Stephen Poloz, but slow growth and low inflation means
a rate hike is not seen until the fourth quarter of 2014, a
Reuters poll showed. 
    Prices for Canadian government debt were higher, with the
two-year bond up 4.5 Canadian cents to yield 1.128
percent. The benchmark 10-year bond climbed 25
Canadian cents, yielding 2.463 percent.