* C$ hits session high of C$1.0287 per U.S. dollar
* Focus on Tuesday's Bank of Canada rate announcement
* Bond prices mixed across the curve (Recasts)
TORONTO, Oct 19 (Reuters) - The Canadian dollar was higher against the greenback on Monday afternoon, rising on firm commodity prices and ahead of the Bank of Canada's interest rate announcement on Tuesday.
The rally was aided also by a weaker U.S. dollar as investors bet the Federal Reserve will hold U.S. interest rates near zero well into next year.
"It's really just recouping some of the lost ground from Friday and over the weekend," said Eric Lascelles, chief economics and rates strategist TD Securities.
"And the market has managed to wrap its head around the idea that the Bank of Canada is not hiking (rates) in the near term and as a consequence the selling pressure in Canada has abated now that markets are aware of that fact."
The Bank of Canada is expected keep interest rates steady at record lows and only tinker with its economic forecasts on Tuesday as it waits for firmer evidence of economic recovery. [ID:nN16310648]
Canada's currency rose as high as C$1.0287 to the U.S. dollar, or 97.21 U.S. cents, on Monday, which was its highest level since Thursday.
By 1:50 a.m. (1750 GMT), the Canadian dollarwas at C$1.0295 to the U.S. dollar, or 97.13 U.S. cents, up from C$1.0382 to the U.S. dollar, or 96.32 U.S. cents, at Friday's close.
Helping the currency's rise were gold prices that held above $1,050 an ounce and oil prices that steadied above $78 a barrel. [GOL/] [O/R]
Canadian bond prices, with no major domestic economic data to influence trade, were mixed as investors opted to move into stocks and other riskier assets.
Data released on Monday showed Canadians sold C$2.71 billion of foreign bonds in August and bought the same amount in foreign stocks. [ID:nN19523333]
The two-year bondwas up 2 Canadian cents at C$99.24 to yield 1.620 percent, while the 30-year bond was down 10 Canadian cents at C$116.90 to yield 3.985 percent. (Editing by Peter Galloway)
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