CANADA FX DEBT-C$ rises on ECB talk, U.S. stimulus hope

* C$ rises as high as C$1.0035 vs US$, or 99.65 U.S. cents
    * Follows oil, global markets higher
    * Bond prices retreat across the curve

    By Jennifer Kwan
    TORONTO, July 27 (Reuters) - The Canadian dollar soared to
its highest level in 10 weeks on Friday on growing expectations
the European Central Bank will take action to tackle the
region's sovereign debt crisis and hopes of further stimulus by
the U.S. Federal Reserve.
    Market sentiment got an additional boost after the leaders
of France and Germany said they are "determined to do everything
to protect the euro zone" and its single currency. That echoed
ECB President Mario Draghi's pledge on Thursday to do whatever
is necessary to protect the euro zone from collapse.
    "Lots of lip service from the ECB and Europe in general. The
markets obviously liking the comments out of there and hoping
for some action," said John Curran, senior vice president at
    The Canadian dollar stood at C$1.0045 versus the
greenback, or 99.55 U.S. cents, after hitting a high of
C$1.0035. On Thursday, it finished the North American session at
C$1.0096 against the U.S. dollar, or 99.05 U.S. cents.
    Curran said the market was also optimistic the U.S. Federal
Reserve will move to stimulate the economy after data showed
U.S. economic growth slowed in the second quarter. 
    Top U.S. Federal Reserve officials recently spelled out what
measures they might take to boost growth and hiring. Fed action
could come as soon as next week, when the Fed's policy-setting
committee meets on Tuesday and Wednesday.
    "People are looking for, hoping, praying for stimulus from
the Fed. That's why the market is adding risk," said Curran.
    Blake Jespersen, managing director of foreign exchange sales
at BMO Capital Markets, said market moves will be largely
contained until there is more clarity around Europe.
    "It's still fairly rangebound, lighter volumes, and I think
the market in general is just waiting for more clarity from the
ECB in terms of what they have in mind to sustain the euro at
whatever cost," added Jespersen.
    Canadian bond prices moved lower across the curve with the
two-year bond off 20 Canadian cents to yield 1.115
percent, and the benchmark 10-year bond down 98
Canadian cents lower to yield 1.750 percent.