*Canadian dollar rises 0.2 percent against greenback
*Investors await vote on revised U.S. bailout plan
*Bonds rally on safe haven bid as equities drop
TORONTO, Oct 1 (Reuters) - The Canadian dollar rose against the U.S. greenback on Wednesday in a slight rebound from the big losses of the previous session as investors awaited a key vote on the revised U.S. bailout plan for the financial markets.
Canadian bond prices rallied on a safe haven bid as equities markets opened lower.
At 9:42 a.m. (1342 GMT), the Canadian dollar was at C$1.0623 to the U.S. dollar, or 94.14 U.S. cents, up from C$1.0642, or 93.97 U.S. cents, at Tuesday’s close.
The currency rose 0.2 percent against the greenback, barely cutting into the 1.9 percent it lost in the previous session.
“The Canadian dollar’s rally against the U.S. dollar overnight was primarily a rebound after quarter-end factors,” said Jack Spitz, managing director of foreign exchange at National Bank Financial.
With liquidity already tight in the markets due to concerns about more big mortgage securities-related losses by financial institutions, the need to balance books at quarter-end led to a big push for U.S. dollars on Tuesday.
Some of that pressure eased overnight and the greenback slipped against other major currencies.
The Canadian dollar held onto its gains, while the euro fell on soft data from the euro-zone, as well as news that leaders from France, Germany, Britain and Italy, along with European Central Bank President Jean-Claude Trichet and Eurogroup chairman Jean-Claude Juncker would likely meet on the weekend to discuss the financial crisis.
While the news and data from Europe did not have a direct impact on the Canadian dollar, the indirect influence cannot be ignored, said Spitz.
“From a global risk temperature standpoint, they have a lot to do with whether or not the (U.S.) dollar is going to be bid,” he said, adding that moves in the Canadian dollar will be driven by U.S. dollar flows during the current financial turmoil.
He said he expects the Canadian dollar to trade in a range of C$1.0550 to C$1.0650 during the North American session.
The U.S. Senate will vote on a revised bailout plan for its financial sector late on Wednesday, which will dominate the news flow.
Canadian bond prices rallied on an unwind of the previous session’s sell-off, as equities prices opened lower, feeding a safe-haven bid for bonds.
“It’s just continued concern about the (U.S.) rescue package in terms of whether it’s going to get through or not,” said Paul Ferley, assistant chief economist at Royal Bank of Canada.
“It isn’t a done deal. There is still some bargaining that’s going to have to go on to get the necessary votes and that nervousness is playing out in equities, which is spilling over into the fixed income markets.”
The two-year bond rose 16 Canadian cents to C$100.08 to yield 2.711 percent. The 10-year bond gained 82 Canadian cents to C$104.77 to yield 3.658 percent.
The yield spread between the two-year and the 10-year bond was 105 basis points, up from 97.3 basis points at the previous close.
The 30-year bond added C$1.55 to C$114.30 for a yield of 4.142 percent. In the United States, the 30-year Treasury yielded 4.199 percent.
The three-month when-issued T-bill yielded 1.93 percent, down from 2.00 percent at the previous close. (Reporting by John McCrank; Editing by Scott Anderson)