* C$ firmer but lags other majors versus the greenback
* Bond prices give way to rising stocks
* Canada's capacity utilization data has little impact
TORONTO, March 16 (Reuters) - The Canadian dollar was firmer against the U.S. dollar on Monday morning in a market willing to take on more risk, but gains were held back by the slipping price of oil.
The Canadian dollar was helped by stock markets, which continued last week's gains with spirits lifted after British bank Barclays Plc said it had had a "strong start" to 2009, echoing comments last week by some big U.S. lenders that they were profitable in January and February. [MKTS/GLOB]
Also, U.S. Federal Reserve Chairman Ben Bernanke said on Sunday that the sees the U.S. economic decline moderating and recovery beginning in 2010.
At 9:45 a.m. (1345 GMT), the Canadian dollar was at C$1.2695 to the U.S. dollar, or 78.77 U.S. cents, up from C$1.2725 to the U.S. dollar, or 78.59 U.S. cents, at Friday's close.
Earlier, it had climbed as high as C$1.2635 to the U.S. dollar, or 79.15 U.S. cents.
"We're seeing the Canadian dollar strengthening today, based on continued risk appetite spilled over from last week. And then also the U.S. dollar is weaker across the board," said Matthew Strauss, senior currency strategist at RBC Capital Markets.
The recovery in risk appetite pushed the U.S. dollar lower, while the euro hit its highest level in more than a month. [ID:FRX/]
The Canadian currency's rise, however, lagged that of the euro and other major currencies versus the greenback, partly because oil prices fell after OPEC decided not to lower output targets. Crude prices often set the direction of the Canadian dollar since Canada is a major exporter of oil.
Data on Monday showed Canadian industries ran at a record low 74.7 percent of capacity in the fourth quarter of 2008, pulled down by weak demand for manufactured goods [ID:N16], but the figures were within expectations and had little impact on the currency.
Canadian bond prices were lower across the curve as rising stock markets chipped away at the safe-haven appeal of government debt.
The two-year bond fell 6 Canadian cents to C$102.95 to yield 1.005 percent. The 10-year bond fell 33 Canadian cents to C$107.42 to yield 2.904 percent.
The 30-year bond lost 90 Canadian cents to C$124.00 to yield 3.633 percent. The U.S. 30-year bond yielded 3.787 percent. (Reporting by Ka Yan Ng; Editing by Peter Galloway)