* C$ ends at 99.07 U.S. cents
* Touches highest level since Dec. 7
* Bank Governor Carney's speech keeps investors cautious
* Canadian bond prices flat to higher (Updates to close)
TORONTO, Dec 13 (Reuters) - Canada's dollar rallied toward a one-week high on Monday, boosted by a broadly weaker U.S. dollar, but a dovish speech by Bank of Canada Governor Mark Carney checked its gain.
The Canadian dollar CAD=D4 reached as high as C$1.0028 to the U.S. dollar, or 99.72 U.S. cents, its highest point since Dec. 7, rising as the U.S. currency fell, partly because China refrained from raising interest rates to quell inflation, which helped to stoke global risk appetite. [FRX/] [ID:nTOE6BB00G]
"It's broad U.S. dollar selling. If that wasn't the case on the market today Canada would be very much weaker against the U.S. dollar," said Sacha Tihanyi, currency strategist at Scotia Capital.
"It's a day in which the U.S. dollar has very much fallen out of favor."
Analysts said upbeat Chinese economic data, including industrial output and inflation figures, also helped send commodity prices higher, which supported the Canadian currency's rise. [ID:nBJL002113] [ID:nL3E6ND0F6] [O/R] [GOL/]
The Canadian dollar finished at C$1.0077 to the U.S. dollar, or 99.24 U.S. cents, up from Friday's finish of C$1.0094 to the U.S. dollar, or 99.07 U.S. cents.
Data that showed Canada's industrial capacity use pushed to a higher-than-expected 78.1 percent in the third quarter, suggesting businesses are coping with a stronger currency, gave the Canadian dollar a lift as well. [ID:nN13189872]
The key obstacle to the currency's rise was a speech by central bank Governor Carney, who warned Canadians on Monday of the risks inherent in what he predicted would be a prolonged period of low interest rates in advanced economies. [ID:nN13195274]
"For Canada, the biggest event of note was Mark Carney's speech. That was probably a factor that helped to drive a bit of Canadian dollar weakness in the market -- interpreted to be a little bit more on the dovish side," Tihanyi said.
BOND PRICES RISE
Canadian bond prices were largely flat to higher, rebounding with U.S. Treasuries, which found buyers in a market in which they had recently been pummeled.
The interest-rate sensitive two-year bond CA2YT=RR rose 10 Canadian cents to yield 1.666 percent, boosted by Carney's statement that global interest rates are likely to remain low for a prolonged period.
The 10-year bond CA10YT=RR rose 57 Canadian cents to yield 3.238 percent. (Reporting by Ka Yan Ng and Jennifer Kwan; editing by Peter Galloway)