CANADA FX DEBT-C$ climbs as Canada eyes budget surplus in 3 yrs

* C$ ends at C$0.9967 vs US$, or $1.0033

* Bond prices up across the curve

* Canada eyes budget surplus in 3 years

TORONTO, March 29 (Reuters) - The Canadian dollar rebounded against the U.S. dollar on Thursday as equities recovered and markets anticipated the release of Canada’s federal budget that would highlight the country as a strong investment destination.

Canada opted for the slow road to a balanced budget and kept spending cuts relatively mild in a cautious budget released after the North American session close. It was nonetheless packed with policy reforms that ranged from raising the retirement age to fast-tracking approvals for big oil and mining projects.

“All of it is generally good news for Canada, and is likely to keep our credit rating as triple-A and is likely to focus some attention on Canada as in an important investible destination for those looking for strong sovereigns,” said Camilla Sutton, chief currency strategist at Scotia Capital.

Jack Spitz, managing director of foreign exchange at National Bank Financial, said expectations that Canada’s budget would emphasize “prosperity versus austerity” helped the Canadian dollar rise into positive territory against the greenback on Thursday even before the plan was released.

After the budget, the currency was largely unchanged.

Riskier currencies also benefited from rising U.S. stocks that shook off most of their earlier losses, despite weak U.S. jobless claims data.

The Canadian dollar ended the North American session at C$0.9967 against the U.S. currency, or $1.0033, up slightly from Wednesday’s close at C$0.9979 per U.S. dollar, or $1.0021.

Spitz noted the Canada dollar was still stuck in its eight-week range between C$0.9850-C$1.0050.

Earlier in the day, the currency had followed broader risk sentiment lower.

“With the exception of the volatility around the 11:00 a.m. (ET) fix, the Canadian dollar was more or less tracking the flow in equities in a typical risk-off environment,” Spitz said.

“There’s been a fairly significant influence from month-end sources, typically asset managers with hedge adjustments.”

Investors on Friday will keep and eye on Canadian gross domestic product data for January.

Event risks in the next few days also include Spain’s budget presentation, which will show how far the government will tighten its belt, and a meeting of euro zone finance ministers, where policymakers are expected to increase the combined lending ceiling of their two bailout funds.

Canadian bond prices were higher across the curve, mimicking U.S. Treasuries after U.S. jobless claims figures undercut optimism about U.S. job growth and Federal Reserve Chairman Ben Bernanke said again the economy’s recovery was relatively weak.

Canada’s two-year bond was up 3 Canadian cents to yield 1.182 percent. The 10-year bond added 30 Canadian cents to yield 2.084 percent, up from around 2.082 percent before the federal budget was released.

Canada’s budget included measures to temporarily increase Canada’s issuance of 10-year bonds in the coming fiscal year in order to take advantage of low rates.