* Canadian dollar extends gains from previous session
* Thursday's CPI data and Bank of Canada speech in focus
* Bond prices recoup more of last week's sharp losses
By Frank Pingue
TORONTO, June 17 (Reuters) - The Canadian dollar rose against the U.S. dollar on Tuesday, extending gains from the previous session, as weak data undercut the greenback.
Domestic bond prices climbed across the curve as the market started to moderate its expectations for a U.S. Federal Reserve interest rate hike any time soon.
At 9:55 a.m. (1355 GMT), the Canadian unit was at C$1.0190 to the U.S. dollar, or 98.14 U.S. cents, up from C$1.0225 to the U.S. dollar, or 97.80 U.S. cents, at Monday's close.
The rise in the Canadian dollar, which earlier on Tuesday hit C$1.0182 to the U.S. dollar, or 98.21 U.S. cents, put it at its highest against the greenback in nearly a week and helped it reclaim some of a 1-percent slide from last week.
But, as on Monday, the Canadian dollar's rise was pegged more to a weak U.S. dollar after U.S. data prompted some market participants to scale back expectations for an early Fed rate hike.
"There are a few reports in the media in which officials are saying the market's got too many rate hikes priced in for the U.S.," said Eric Lascelles, chief economics and rates strategist at TD Securities. "And if you believe that then it suggests that the U.S. dollar may have room to fall."
The U.S. data that backed the latest move in the currency showed May's core consumer prices matched expectations while housing starts decreased.
Meanwhile, domestic data showed foreigners purchased C$9.75 billion of Canadian securities in April, the highest since November 2006, which gave a mild bid tone to the Canadian dollar.
Key events in Canada that will be watched closely by market participants are Thursday's May consumer price index data and Bank of Canada Governor Mark Carney's speech in Calgary.
Carney, who will be giving his first speech since the central bank unexpectedly left its key interest rate steady, will speak on "Capitalizing on the Commodity Boom: The Role of Monetary Policy" late on Thursday after markets close.
BOND PRICES HIGHER
Canadian bond prices, which continued to reclaim some of the steep losses suffered last week, were higher as investors opted for more secure assets like government debt as recent data hasn't been supportive of U.S. interest rate hikes.
Lascelles said some market participants had too many U.S. Federal Reserve rate hikes priced into the market and that was starting to come out of the market.
"To me it is not realistic to look for 100 plus basis points of hiking over the span of the next several months in the U.S.," said Lascelles. "I think they are going to have to fight to remain on hold and maybe at some point in (2009) they can start looking towards hiking."
The overnight Canadian Libor rate LIBOR01 was at 3.0033 percent, up from 3.0233 percent on Monday.
Monday's CORRA rate CORRA= was 3.0079 percent, up from 3.0043 percent on Friday. The Bank of Canada publishes the previous day's rate around 9 a.m. daily.
The two-year bond climbed 14 Canadian cents to C$100.85 to yield 3.298 percent. The 10-year bond gained 22 Canadian cents to C$101.10 to yield 3.852 percent.
The yield spread between the two-year and 10-year bond was 54.6 basis points, up from 51.4 at the previous close.
The 30-year bond rose 35 Canadian cents to C$113.60 for a yield of 4.185 percent. In the United States, the 30-year treasury yielded 4.771 percent.
The three-month when-issued T-bill yielded 2.72 percent, down from 2.79 percent at the previous close. (Editing by Bernadette Baum)