* C$ climbs as high as C$1.1019 to the U.S. dollar
* Commodity price rally, risk appetite drive gain
* Bond prices lower across curve
TORONTO, July 20 (Reuters) - The Canadian dollar shot to its highest level in just over five weeks on Monday, driven by a rally in commodity prices and increased optimism about the state of the global economic recovery.
Canada's currency rallied as high as C$1.1019 to the U.S. dollar, or 90.75 U.S. cents, which marked its highest level since June 12. The move came on the heels of its 4.4 percent rally last week.
"The markets have been feeling a lot better about things, whether it's the earnings reports that we saw last week or just the fact that people are starting to feel that things are starting to turn the corner again," said Steve Butler, director of foreign exchange trading at Scotia Capital. "The world just looks like an awfully safe place once again this morning."
By 9:00 a.m. (1300 GMT), the Canadian unit eased slightly to C$1.1053 to the U.S. dollar, or 90.47 U.S. cents, which was still up from Friday's close of C$1.1161 to the U.S. dollar, or 89.60 U.S. cents.
Higher prices for oil and gold, both key Canadian exports, helped lure traders into the Canadian dollar, while demand for more risky assets also lent the currency a boost.
Domestic bond prices were down across the curve as news that retail and small business lender CIT Group reached a deal late on Sunday could allow it to avoid bankruptcy cut demand for more secure government debt. [nN19323064] (Editing by Jeffrey Hodgson)
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