* C$ at C$1.0304 vs US$, or 97.05 U.S. cents * Canadian bond prices higher across the maturity curve By Leah Schnurr TORONTO, Oct 17 (Reuters) - The Canadian dollar strengthened to hit a more than one-week high on Thursday, with investors dumping the greenback on expectations that the fallout from the U.S. government shutdown will see the Federal Reserve keep its economic stimulus in place. U.S. lawmakers came to a last-minute agreement on Wednesday night that ended a partial shutdown that started at the beginning of the month and raised the debt ceiling, avoiding a potential default. Still, the deal is only a temporary solution and raises the possibility of another budget impasse in the new year. Investors were assessing how much of a bite the shutdown may have taken out of U.S. economic growth. Canada's fortunes are closely tied to its neighbor south of the border, which is its largest trading partner. Weaker growth prospects could mean the Fed will have to maintain the pace of its $85 billion a month in asset purchases longer than had been anticipated. "Everyone is starting to believe that due to inefficient economic growth, tapering will not be on the table any time soon," said Dean Popplewell, chief currency strategist at OANDA. The Canadian dollar was at C$1.0304 versus the U.S. dollar, or 97.05 U.S. cents, stronger than Wednesday's close of C$1.0334, or 96.77 U.S. cents. The loonie touched a session high of C$1.0291. The greenback tumbled 0.9 percent against a basket of currencies. Expectations of a delay in reducing the Fed's monetary policy tends to weigh on the dollar, partly because it pushes expectations of an eventual interest rate increase out further. The release of a backlog of U.S. data that was postponed by the shutdown - including September's jobs report - will be key to assessing the Fed's likely path. Investors were also digesting a promise from the Canadian government that it will introduce legislation that will require balanced budgets except during economic crises, as well as a renewed pledge to balance its books by 2015. "(That) certainly gives Canada some extra love out there," said Popplewell of the currency. Government bond prices were higher across the maturity curve. The two-year bond rose 3.5 Canadian cents to yield 1.198 percent, while the benchmark 10-year bond gained 24 Canadian cents to yield 2.585 percent.