CANADA FX DEBT-C$ firms to 2-1/2-month high as stocks rise, RBA cuts rates

* C$ at C$1.0055 vs US$, or 99.45 U.S. cents
    * Currency hits strongest since Feb. 15 vs greenback
    * Global stocks strongest in five years
    * C$ surges against Aussie as RBA cuts rates
    * Bond prices mostly lower

    By Andrea Hopkins
    TORONTO, May 7 (Reuters) - The Canadian dollar strengthened
to a 2-1/2-month high against its U.S. counterpart on Tuesday as
shares globally hit their strongest level in almost five years
and top central banks signaled they will remain supportive of
    MSCI's global index, which tracks stocks in 
45 countries, edged past its June 2008 highs in Asian trading 
after Japan's Nikkei stock market, which had been closed on 
Monday, jumped in a delayed reaction to Friday's U.S. jobs data.
    The momentum continued in Europe, where the DAX hit
a record following strong industrial data. 
    The head of the European Central Bank had underpinned the 
positive mood on Monday by saying the ECB was ready to trim
rates again if needed, while the Reserve Bank of Australia cut
rates to a new low of 2.75 percent on Tuesday and suggested it
may do more. 
    "The Canadian dollar is being held up by some of the crosses
-- particularly the Aussie-CAD ... in the backwash of the RBA
move, and that has provided a reasonably healthy backdrop for
the Canadian dollar overall," said Jeremy Stretch, head of
foreign exchange strategy at CIBC World Markets in London.
    At 9:28 a.m. (1328 GMT), the Canadian dollar was
trading at C$1.0055 to the U.S. dollar, or 99.45 U.S. cents,
stronger than Monday's North American close at C$1.0068 to the
U.S. dollar, or 99.32 U.S. cents.
    The currency at one point touched C$1.0036 against the
greenback, its strongest level since Feb. 15. 
    The Canadian dollar rallied to its strongest level since
October against Australia's currency after the RBA surprised
many traders with the rate cut. The Canadian dollar firmed as
far as C$1.0211 to the Australian currency. 
    Stretch said the Canadian dollar was likely to be
range-bound for most of the session against the U.S. dollar,
finding support if it weakened toward C$1.0080 to C$1.0095,
while strength would be limited to C$1.0050 or parity with the
U.S. dollar.
    He said traders would be watching data on Canadian housing
starts, due to be released on Wednesday. The report is expected
to show the pace of new homebuilding to slow to a seasonally
adjusted annual rate of 175,000 units in April, down from
184,000 units in March.
    Investors are also awaiting Friday's Canadian employment
data. The report is expected to show the economy added 15,000
jobs in April, while the unemployment rate held steady at 7.2
percent, according to a Reuters survey of analysts.
    Traders are also looking for more clues on what newly
appointed Bank of Canada Governor Stephen Poloz will say about
monetary policy. 
    Prices for Canadian government bonds were mostly lower. The
two-year bond fell 1.3 Canadian cents to yield 0.984
percent, while the benchmark 10-year bond fell 22
Canadian cents to yield 1.826 percent.