CANADA FX DEBT-C$ rises, extends recovery after steady rate decision

* Canadian dollar at C$1.4416 or 69.37 U.S. cents
    * Bond prices lower across the maturity curve

    TORONTO, Jan 21 (Reuters) - The Canadian dollar firmed
against its U.S. counterpart on Thursday, extending its recovery
from a 12-year low after the Bank of Canada surprised many
traders by deciding not to cut interest rates on Wednesday.
    The Bank of Canada left its benchmark policy rate on hold at
0.50 percent despite a worsening oil price shock. 
Catching the attention of some market players, the bank
highlighted the risk that a large and fast depreciation in the
Canadian dollar could boost inflation expectations.
    It is an upside inflation risk that could "prompt a more
hawkish policy," according to a research note from Scotiabank on
    U.S. stock index futures turned higher, providing added
support for the risk-sensitive commodity currency.
    European Central Bank President Mario Draghi kept the door
open to more stimulus, saying the bank will "review and possibly
reconsider" its monetary policy stance when it next meets in
    Crude oil prices however remained near 12-year lows on
persistent concerns about oversupply and the outlook for demand.
 U.S. crude prices were down 0.99 percent to
$28.07 a barrel.    
    At 8:59 a.m. EST (1359 GMT), the Canadian dollar 
was trading at C$1.4416 to the greenback, or 69.37 U.S. cents,
stronger than Wednesday's close of C$1.4490, or 69.01 U.S.
    The currency's strongest level of the session was C$1.4394,
while its weakest was C$1.4540. On Wednesday, it hit its weakest
level since April 2003 at C$1.4689.    
    U.S. economic data was mixed. A six-month high for U.S.
jobless claims suggested some loss of momentum in the labor
market. However, the Philadelphia Federal Reserve
business conditions index rose to its highest since August.
    Canadian government bond prices were lower across the
maturity curve, with the two-year price down 1
Canadian cent to yield 0.394 percent and the benchmark 10-year
 falling 19 Canadian cents to yield 1.181 percent.
    The Canada-U.S. 10-year spread was 3.8 basis points less
negative at -78.3 basis points as Canadian government bonds
    The Bank of Canada will conduct a C$2.5 billion 10-year
auction on behalf of the Government of Canada. The bidding
deadline is 12:00 p.m. EST (1700 GMT). December inflation and
November retail sales data are awaited on Friday. 

 (Reporting by Fergal Smith; Editing by Meredith Mazzilli)