* C$ gets brief boost above 81 U.S. cents
* G20 deal to fight economic crisis, helps spur gains
* Bonds lower across the curve
(Updates figures to close)
TORONTO, April 2 (Reuters) - Appeal for riskier assets spurred by optimism from the G20 summit in London helped push the Canadian dollar to its highest level against the U.S. dollar in nearly a week on Thursday.
Underpinning the currency's surge was a rally in global equity markets and a sharp retreat in the greenback as leaders from the 20 high-income and developing countries agreed a $1.1 trillion deal to combat the deepest economic downturn since the Great Depression, while also vowing to tighten financial rules to stop it from happening again. [ID:nL1230573]
"It's about confidence," said Patricia Croft, chief economist at RBC Global Asset Management. "Markets are embracing risk, at least for now."
The Canadian dollar finished at C$1.2409 to the U.S. dollar, or 80.59 U.S. cents, up from Wednesday's close of C$1.2610 to the U.S. dollar, or 79.30 U.S. cents.
Earlier, it had rallied as high as C$1.2339 to the U.S. dollar, or 81.04 U.S. cents.
"There is a lot of optimism in the market right now in terms of some of the announcements coming out of the G20 meeting," said George Davis, chief technical strategist at RBC Capital Markets.
"Markets are very hopeful that global measures taken are going to help revive the global economic system so that's been taken in a positive stride."
Davis said part of the currency's gain versus its U.S. counterpart was stop-loss driven as the greenback's fall below C$1.2433 caught investors off guard.
Another boost came from the relaxation of mark-to-market accounting rules in the United States, which Davis said helped underpin sentiment as it should help the balance sheets of financial companies. [ID:nWEN6801]
"Whenever equity markets rally and risk aversion moves lower that has generally been an environment that has been bearish for the U.S. dollar," said Davis. "So we've seen the U.S. dollar under pressure across the board."
Croft added the Canadian unit was helped as the price of oil CLc1, a key Canadian export, shot up more than 9 percent as G20 deals boosted equity markets. [ID:nT180356]
Looking ahead, markets will be firmly focused on U.S. jobs figures due on Friday. Forecasters polled by Reuters expect nonfarm payrolls to register a decline of 650,000 for March. [ID:nN01523085]
BONDS LOWER
Canadian government bond prices were lower across the curve as optimism about a recovery prompted investors to shift money out of safe havens and into riskier equity markets.
"Bond markets are perhaps pricing in a little bit of that expectation that although the economic numbers are still pretty bad they're not as bad," said Croft.
The two-year bond fell 9 Canadian cents to C$100.29 to yield 1.113 percent. The 10-year bond retreated 80 Canadian cents to C$107.80 to yield 2.858 percent.
The 30-year bond pulled back C$1.35 to C$124.30 to yield 3.617 percent. The U.S. 30-year bond yielded 3.5794 percent.
Canadian government bonds outperformed across much of the curve with the spread between the Canadian and U.S. 30-year bond yields narrowing to 3.10 basis points, from 5.20 basis points at Wednesday's close. (Reporting by Jennifer Kwan and Frank Pingue)
