* C$ builds on overnight gains, hits $1.0145
* Bonds give ground on profit-taking, more stable stocks
* G7 ministers to talk, market on intervention watch
* Canada wholesale trade up 1.5 pct, forecast was 0.6 pct
By Ka Yan Ng
TORONTO, March 17 (Reuters) - The Canadian dollar CAD=D4 advanced against the U.S. currency on Thursday morning, supported by higher oil prices and stronger-than-expected Canadian wholesale trade data for January.
Oil, a key driver for the commodity-linked Canadian dollar, rose by more than $2 a barrel as unrest in Saudi Arabia, Bahrain and Libya heightened supply disruption concerns. [O/R]
"I think the Canadian dollar is strengthening on the back of oil rallying on continued concerns in the Middle East. I think that's why we're seeing Canada do better," said David Bradley, director of foreign exchange trading, at Scotia Capital.
Impeding the currency's gains was continuing anxiety about developments in Japan's nuclear crisis. Japanese military helicopters dumped water to cool an ailing reactor at the Fukushima Daiichi nuclear plant on Thursday and a water cannon was also being used but radiation levels at the plant remained high [ID:nL3E7EH18S].
At 9:28 a.m. (1328 GMT), the Canadian dollar was three ticks shy of its high for the day thus far, trading at C$0.9857 to the U.S. dollar, or $1.0145, adding to steady overnight gains and up from C$0.9918 to the U.S. dollar, or $1.0083, at Wednesday's close.
Market focus was squarely on the Japanese yen, which traded near a record high against the U.S. dollar. It hovered around levels that traders fear could trigger action by the Japan to weaken the currency through direct market intervention. [FRX/]
Market watchers were also on guard for the outcome of a Group of Seven conference call, where finance ministers and central bankers will discuss possible steps to calm volatile financial markets roiled by fears about the crisis in Japan. [ID:nLDE72F1HC]
Economic data on Thursday morning helped support the Canadian dollar. Canadian wholesale trade soared to its highest level in over three years in January, jumping 1.5 percent in the month and exceeding the market forecast of a 0.6 percent gain. Sales were up 5.2 percent on the year. [ID:nN17271262]
Separately, foreigners invested more in Canadian securities in January than any month since September 2010, taking advantage of favorable yields on short-term bonds to add federal government debt to their portfolios. [ID:nN17119727]
Canadian government bond prices gave up some of this week's gains as investors booked profits and world stocks stabilized.
The two-year Canadian government bond CA2YT=RR fell 12 Canadian cents to yield 1.587 percent, while the 10-year bond CA10YT=RR shed 15 Canadian cents to yield 3.172 percent. (Reporting by Ka Yan Ng; editing by Peter Galloway)