(Refiles to add dropped word to headline)
* C$ rebounds from early weakness as oil and equities firm
* Bank of Canada holds rates steady, but warns on C$
* Makes no mention of unconventional monetary easing
* Bonds fall as equities gain (Updates to midafternoon)
TORONTO, June 4 (Reuters) - The Canadian dollar rebounded against the U.S. currency on Thursday as rising equity markets and firmer oil prices outweighed Bank of Canada caution about the currency’s recent strength.
The currency fell as low as C$1.1100 to the U.S. dollar, or 90.09 U.S. cents, though still up from the session low, as traders digested unusually strong comments from the central bank about the currency, which surged 9.3 percent in May alone, its biggest monthly gain since at least 1950. [ID:nN0479627]
But as the day progressed, the Canadian dollar bounced back, aided by gains on equity markets and influenced by the rising price of oil.
At 3:07 p.m. (1907 GMT), the Canadian unit was at C$1.0975 to the U.S. dollar, or 91.53 U.S. cents, up from C$1.1084 to the U.S. dollar, or 90.22 U.S. cents, at Wednesday’s close.
“The Bank of Canada in my mind isn’t in the business of swaying currencies or influencing them, either through verbal tactics or through buying and selling,” said Eric Lascelles, chief economics and rates strategist at TD Securities.
“What I took from the statement was just that although a stronger Canadian dollar may normally dampen the outlook, enough positive things have happened to make it largely a wash.”
Canada’s export-oriented economy is already in a deep recession and a stronger currency could hurt demand for exports and stall recovery.
Bonds were weaker across the curve amid gains in equity markets. Stocks typically trade inversely to bonds as an indicator of risk appetite.