* C$ hits C$0.9966 VS US$, or US$1.0034 * Strongest level since May 11 * Bond prices slip across the curve By Jon Cook TORONTO, Aug 7 (Reuters) - Canada's dollar firmed to its strongest level in nearly three months against its U.S. counterpart on Tuesday, boosted by investor hopes that the European Central Bank will support bond markets in the struggling euro zone. Markets have enjoyed a strong run on expectations the ECB will step in and buy bonds to ease pressure on Spain and Italy, albeit under strict conditions that are yet to be spelled out. With markets closed in Canada on Monday, the Canadian dollar picked up where it left off on Friday, rising after strong U.S. employment numbers fueled a broad commodities rally. "The tone of markets has been risk positive since that data," said Adam Cole, global head of foreign exchange strategy at Royal Bank of Canada in London. On Tuesday, the Canadian currency touched a session high at C$0.9966 against the greenback, or $1.0034, its strongest level since May 11. The Australian dollar also rose to its highest in more than four months on Tuesday after the central bank kept interest rates unchanged at 3.5 percent and dropped few hints it was in a hurry to ease again. At 8:47 a.m. EDT (1447 GMT), the Canadian dollar was at C$0.9969, or US$1.0031, up from Friday's close at C$1.0019, or 99.81 U.S. cents. Traders were looking ahead to when U.S. Federal Reserve Chairman Ben Bernanke hosts a town hall meeting with educators from across the country on Tuesday for any signals of further stimulus moves, such as quantitative easing, from the central bank. "If the market continues to believe that the Fed is going to go down the QE3 road in September, that will continue to support risk and the Canadian dollar," said Cole. Cole said the Canadian currency would likely stay within a range between a high of C$0.9950 against the greenback, or US$1.0050, and its low from last week at C$1.0085, or 99.16 U.S. cents. Canadian bond prices slipped across the curve with the two-year bond off 5 Canadian cents to yield 1.150 percent, and the benchmark 10-year bond down by 47 Canadian cents to yield 1.821 percent.