CANADA FX DEBT-C$ hits 6-week high on Fed easing hopes

* C$ hits 6-wk high at $1.0140 vs US$, or 98.62 U.S cents
    * Canadian bond prices rise across the curve

    By Claire Sibonney
    TORONTO, July 3 (Reuters) - The Canadian dollar climbed to
its strongest level in more than six weeks against the U.S.
dollar on Tuesday, buoyed by enthusiasm from a global stock
market rally as expectations rose that major central banks will
take more action to support the world economy.
    The worsening deceleration in global manufacturing activity
around the world has contributed to the view that central banks,
including the U.S. Federal Reserve, will have to respond.
    This view gained momentum on Monday when the U.S. Institute
for Supply Management's data for June showed the giant U.S.
manufacturing sector contracted for the first time in nearly
three years. 
    "After the ISM yesterday, we would have thought maybe more
of a risk-off mood, but people are expecting more in the way of
QE3 now potentially as soon as August and that's one of the
factors we think that is preventing more of an erosion of risk
appetite," said Mark Chandler, head of Canadian fixed income and
currency strategy at RBC Capital Markets.
    "It's still very much a risk-on, risk-off trade. It doesn't
appear that domestic indicators are much of a factor at all."
    At 8:07 a.m. (1207 GMT), the Canadian currency was
at C$1.0161 versus the U.S. dollar, or 98.42 U.S. cents,
stronger than Friday's North American session close of C$1.0181
to the greenback, or 98.22 U.S. cents. Most domestic markets
were closed on Monday for the Canada Day long weekend.
    Earlier the Canadian dollar hit an intraday high of
C$1.0140, or 98.62 U.S. cents, its firmest level since May 18.
    Chandler expected the day's range to hold between C$1.0120
to C$1.0180.
    Canadian bond prices rose across the curve, despite the
pick-up in riskier assets.
    Canada's two-year government bond was up 5
Canadian cents to yield 1.006 percent, while the benchmark
10-year bond gained 32 Canadian cents to yield 1.703