* China stimulus package helps commodity-based currencies
* C$ adds to gains recorded in previous two weeks
* Bond prices all lower on renewed risk appetite
By Frank Pingue
TORONTO, Nov 10 (Reuters) - The Canadian dollar rose versus the U.S. dollar on Monday as initiatives announced by China to stimulate its economy gave a bid to the currencies of countries whose economies rely heavily on exporting commodities.
Canadian bond prices were lower across the curve as the prospect of renewed growth in slumping economies helped to temper fears of a deep global recession and sparked renewed interest in equities.
At 9:35 a.m. (1435 GMT), the Canadian unit was at C$1.1828 to the U.S. dollar, or 84.55 U.S. cents, up from C$1.1880 to the U.S. dollar, or 84.18 U.S. cents, at Friday's close.
The rise in the Canadian dollar extends a rally over the past few weeks and helps to erase more of its 11.6 percent skid in October, when equity markets sold off and prompted intense demand for the greenback.
China's launch of a stimulus plan worth nearly $600 billion, which could kick off a round of big spending and interest rate cuts by leading economies to steer clear of a recession, gave a boost to the Canadian dollar. The currency is often influenced by commodity prices or to the outlook for demand in commodities, especially oil and gold.
"We got the news from China over the weekend and that seems to be the primary driver ... and with markets that are still relatively thin, any good news is getting played up to a great degree," said David Watt, senior currency strategist at RBC Capital Markets.
"So just the idea that maybe the China slowdown will be moderate and then they'll get back to buying commodities more aggressively maybe by the middle of next year."
The Canadian currency rallied to C$1.1658 to the U.S. dollar, or 85.78 U.S. cents, early on Monday, but it steadily retreated after domestic data showed housing starts fell 3.1 percent in October.
BOND PRICES ALL DOWN
Canadian bond prices were all lower as the China stimulus plan convinced investors to unload more secure government debt in favor of riskier assets such as stocks.
The Toronto Stock Exchange's main index rose 2.6 percent at the open, while the Dow Jones industrial average was up 0.77 percent.
The drop in bond prices extended losses suffered during the previous session when a better-than-expected headline number on the Canadian jobs report weighed on prices.
The Canadian overnight Libor rate LIBOR01 was 2.5000, unchanged from 2.5000 percent on Friday.
Friday's CORRA rate CORRA= was 2.2411 percent, down from 2.2419 percent on Thursday. The Bank of Canada publishes the previous day's rate at around 9 a.m. daily.
The two-year bond was down 7 Canadian cents at C$101.63 to yield 1.936 percent. The 10-year bond fell 15 Canadian cents to C$104.10 to yield 3.735 percent.
The yield spread between the two- and 10-year bond was 178 basis points, down from 181 basis points at the previous close.
The 30-year bond dropped 30 Canadian cents to C$112.40 to yield 4.246 percent. In the United States, the 30-year Treasury yielded 4.276 percent. (Editing by Peter Galloway)
