* C$ rises to $1.0406
* Bond prices give back some gains
* Bank of Canada to provide details on economic outlook
TORONTO, April 13 (Reuters) - The Canadian dollar was slightly firmer against the U.S. dollar on Wednesday morning, while government bonds were lower as risk sentiment reversed from Tuesday and ahead of detailed economic projections from the Bank of Canada.
Overall, Wednesday was mostly a mirror image of Tuesday, reflecting investors' current tendency to be risk-on one day and risk-off the next. [MKTS/GLOB]
World stocks were up after recent declines, and better-than-expected earnings from JPMorgan served as a positive backdrop. Oil prices firmed as investors sought fresh opportunities to bet on riskier assets.
"All of a sudden everything that was bad yesterday is good," said Michael O'Neill, managing director at Knightsbridge Foreign Exchange.
The Canadian dollar had a quiet overnight session after retreating from 3-1/2 year highs on Tuesday on further scaled-back expectations of near-term interest rate hikes.
"There were a lot of guys out there looking for a Bank of Canada rate hike in May," said O'Neill.
The central bank, which held interest rates steady at 1 percent as expected on Tuesday, put on a balancing act by raising its growth estimates, but it also used strong language on Canadian dollar's strength. [ID:nN12159489]
A strong Canadian dollar is a concern because it could hamper economic growth in an export-oriented country, and O'Neill expects the Bank of Canada will not raise interest rates until the U.S. starts getting ready to do so.
Market focus is now on the Bank of Canada's Monetary Policy Report and news conference on Wednesday morning, where investors hope to find the underlying reasons behind their latest economic projections.
Overnight index swaps, which trade based on expectations for the key central bank rate, show a 6.43 percent chance of a rate hike on May 31, the next policysetting. A September rate hike remains fully priced in by the market with a 25 basis point rise seen.
In a Reuters poll of economists and strategists released last week, however, the median forecast was for the bank to make the first interest rate hike of the year on July 19. [CA/POLL]
At 8:20 a.m. (1220 GMT), the Canadian dollarwas at C$0.9610 to the U.S. dollar, or $1.0406. That is up from C$0.9631 to the U.S. dollar, or $1.0383, at Tuesday's North American finish, which was the Canadian dollar's weakest close in a week.
Government bonds gave up a portion of Tuesday's big gains made on the back of a selloff in equities and revised expectations on near-term Canadian interest rate hikes.
The two-year bond, which is especially sensitive to Bank of Canada policy moves, was off 4 Canadian cents to yield 1.879 percent, while the 10-year bond shed 28 Canadian cents to yield 3.445 percent.
(Reporting by Ka Yan Ng, Editing by Kenneth Barry)
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