CANADA FX DEBT-C$ climbs after China-induced sell-off

* Rises to C$1.0332 per US$, or 96.79 U.S. cents

* Commodity FX recover after China signals tightening

* Bonds follow U.S. Treasuries prices lower

TORONTO, Jan 13 (Reuters) - The Canadian dollar edged higher against the U.S. currency on Wednesday morning as risk appetite firmed and commodity currencies recovered after weakening on China’s signal of tighter monetary policy.

U.S. stocks rose at the open as a positive outlook from Kraft Foods Inc revived hopes of a strong earnings season. [.N]

“It seems to me that perhaps the risk trade is proving slightly favorable,” said Eric Lascelles, chief economics and rates strategist at TD Securities.

At 9:18 a.m. (1418 GMT), the Canadian dollar was at C$1.0332 to the U.S. dollar, or 96.79 U.S. cents, up from Tuesday’s finish at C$1.0393 to the U.S. dollar, or 96.22 U.S. cents.

Lascelles said the Canadian currency may have gotten a bounce after falling in the previous session as investors concluded China’s surprise monetary tightening would not derail growth. [FRX/]

China rattled markets on Tuesday by saying it would tighten banks’ reserve requirements, raising concerns that Chinese demand could fall and slow global economic recovery, hitting commodity-linked currencies.

“We’re seeing an unwinding of that,” said Lascelles.

Canadian bond prices were flat to lower, tracking U.S. Treasuries that slipped on Wednesday as traders took profits and positioned ahead of a large 10-year Treasury note auction. [US/] (Editing by Padraic Cassidy)