CANADA FX DEBT-C$ stronger as oil rises, risk appetite improves

* Canadian dollar at C$1.3121, or 76.21 U.S. cents
    * Bond prices flat to lower across the maturity curve

    TORONTO, July 12 (Reuters) - The Canadian dollar
strengthened against its U.S. counterpart on Tuesday, helped by
higher oil prices and improved global risk sentiment as
political tensions eased in Britain, Japan prepared more
stimulus, and U.S. stocks hit a record high. 
    The gains more than reversed Monday's weakness in the
loonie, as Canada's currency is colloquially known.
    At 8:39 a.m. EDT (1239 GMT), the Canadian dollar 
was trading at C$1.3021 to the greenback, or 76.80 U.S. cents,
stronger than the Bank of Canada's official Monday close of
C$1.3121, or 76.21 U.S. cents.
    The currency's strongest level of the session was C$1.3012,
while its weakest level was C$1.3131.
    The loonie was also stronger against the yen, which fell
broadly as a weekend election victory by Japan's ruling
coalition paved the way for more stimulus. 
    The loonie was underperforming some of its other key
currency counterparts, though, including sterling and the
Australian and New Zealand dollars.
    Canadian monetary policy will be in focus on Wednesday, with
the Bank of Canada due to decide on interest rates and update
its outlook following last week's weak jobs and trade data.
    Canadian government bond prices were flat to lower across
the maturity curve, with the two-year price unchanged
to yield 0.473 percent and the benchmark 10-year 
falling 26 Canadian cents to yield 1.009 percent.
    The Canada-U.S. two-year bond spread was -19.2 basis points,
while the 10-year spread was -46.2 basis points.
    Crude futures bounced back from two-month lows, helped by
the weaker U.S. dollar, but an oil inventory glut and a drop in
bullish bets by investors weighed on prices.   

 (Reporting by Alastair Sharp; Editing by Nick Zieminski)