* Fallout lingers from finance minister warning on C$ rise
* Bond prices weighed by global recovery outlook
By Ka Yan Ng
TORONTO, Aug 5 (Reuters) - The Canadian dollar extended losses against the U.S. currency on Wednesday morning, pressured by comments by the finance minister that steps could be taken to deal with the currency's recent strength.
While other commodity-based and riskier currencies found favor, the Canadian dollar was excluded as investors considered the minister's comments, which raised the possibility of policy makers intervening in the currency market. [ID:nN04143584]
The voiced concern knocked the Canadian dollar from 10-month highs on Tuesday, and market players continued to digest Finance Minister Jim Flaherty's remarks on Wednesday. This was weighed against the Bank of Canada's stance that it stands ready to take further action to stimulate the economy, especially if a stronger currency threatens growth. [ID:nN23196742]
"(The Canadian dollar) is underperforming the other commodity currencies on the back of Flaherty comments yesterday, which have really made people a little bit nervous," said Adam Cole, global head of FX strategy at RBC Capital Markets in London.
Riskier currencies were catching a generally well-bid tone as the North American session was opening and that would typically carry the Canadian dollar higher, he said, but it's being "left behind" because of Flaherty's comments.
For the time being, Cole said the finance minister's comments will likely have set a floor for the Canadian dollar, which on Tuesday had shot as high as C$1.0632 to the U.S. dollar, or 94.06 U.S. cents, its highest level since Oct. 2.
At 8:15 a.m. (1215 GMT), the Canadian dollar was at C$1.0774 to the U.S. dollar, or 92.82 U.S. cents, down from C$1.0745 to the U.S. dollar, or 93.07 U.S. cents, at Tuesday's close.
Canadian bond prices were under pressure on Wednesday morning as European data furthered hopes that the global economic recovery was gaining steam, taking interest away from safe haven assets such as government debt.
Reports showed the deep recession in the euro zone services economy eased in July and Britain's services sector unexpectedly surged in the same month, fuelling hopes the economy might have started growing again in the third quarter. [ID:nLAG003649]
The two-year Canadian bond dropped 10 Canadian cents to C$99.00 to yield 1.493 percent, while the 10-year bond lost 25 Canadian cents to C$101.55 to yield 3.561 percent.
The 30-year bond fell 30 Canadian cents to C$116.10 to yield 4.031 percent. In the United States, the 30-year Treasury yielded 4.491 percent.
(Reporting by Ka Yan Ng)
