* Canadian dollar rises to 10-mth high
* Bond prices ease as investors seek riskier assets
TORONTO, Aug 4 (Reuters) - The Canadian dollar hit a fresh 10-month high versus the U.S. currency on Tuesday, supported by positive risk sentiment, but backed off as commodity prices softened.
The rise was part of a general trend of U.S. dollar weakness that saw greater gains in other currencies, such as the Australian and New Zealand dollars, as well as sterling.
Building on the near 8 percent gain in July, the Canadian dollar rose as high as C$1.0632 to the U.S. dollar, or 94.06 U.S. cents, up 1.3 percent from Friday, before paring gains.
The Canadian dollar backed off its highest since Oct. 2 as commodity prices, particularly crude oil, softened and as investors took profits on recent sharp gains in higher risk and commodity-based currencies.
The underlying positive sentiment, however, was still intact. [ID:nL4454101]
"Canada is actually not the highlighted currency. It's just moving along with the general U.S. dollar selloff like just about every other major," said Firas Askari, head of foreign exchange trading at BMO Capital Markets.
"This market is still highlighted by a real dearth in liquidity."
At 8 a.m. (1200 GMT), the Canadian dollar was at C$1.0701 to the U.S. dollar, or 93.45 U.S. cents, up from Friday's close at C$1.0775 to the U.S. dollar, or 92.81 U.S. cents.
Canadian markets were closed for the Civic Holiday on Monday, when the Canadian dollar made the bulk of its sharp move higher.
Upbeat economic data and corporate earnings as well as higher commodities prices have helped whet investor appetite for riskier currencies, while bond prices have fallen.
No Canadian data is due Tuesday, with the focus during shortened week on domestic and U.S. jobs data on Friday for the latest update on the economic recovery.
Canadian bond prices were lower across the curve as investors sought riskier assets as recovery hopes steam ahead.
The two-year Canadian bond dipped 7 Canadian cents to C$99.09 to yield 1.448 percent, while the 10-year bond lost 15 Canadian cents to C$102.20 to yield 3.483 percent.
The 30-year bond fell 30 Canadian cents to C$117.20 to yield 3.972 percent. In the United States, the 30-year Treasury yielded 4.402 percent.
(Reporting by Ka Yan Ng; editing by Jeffrey Benkoe)
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