* C$ rises to 98 U.S. cents
* Bond prices mixed across curve
By Claire Sibonney
TORONTO, Oct 21 (Reuters) - The Canadian dollar firmed against its U.S. counterpart on Thursday as world stocks and U.S. equity futures ticked higher and the U.S. dollar came under broad selling pressure.
Against a backdrop of nerves about political currency machinations and caution about corporate earnings, investor focus was on the Friday and Saturday meeting of Group of 20 finance and central bank chiefs in South Korea. It is expected to try to reach agreement on a common path to manage currency, trade and macroeconomic imbalances.
"We're sort of middle in the pack for currencies," said Mark Chandler, head of fixed income and currency strategy at RBC Capital Markets. "A slightly weaker U.S. dollar this morning, reflecting an improvement in equity markets."
Chandler noted that somewhat positive reaction to the Bank of Canada's Monetary Policy Report on Wednesday was helping to put a bottom under the Canadian dollar.
"I think it's helped prevent any erosion. Even though it was unfair, what caught people's attention was the idea that the Bank of Canada's forecast incorporated gradual tightening ... most of the rate hikes had been largely priced out throughout the curve."
After pausing on rates on Tuesday, the Canadian central bank said in the MPR that it would have to consider any further rate hikes carefully, given the patchy global recovery, a weak U.S. outlook and expected curbs on Canadian growth. It also said there was still considerable monetary stimulus in place. [ID:nN20216189]
Also supporting risk appetite, some fears about China's recent rate hike ebbed after a batch of data showing a slowdown in economic growth, albeit to a still healthy level, was taken as a sign that there may not be a spate of future tightenings. [ID:nTOE69K00X]
At 8:05 a.m. (1205 GMT), the Canadian dollar CAD=D4 stood at C$1.0204 to the U.S. dollar, or 98.00 U.S. cents, up from Wednesday's finish at C$1.0222 to the U.S. dollar, or 97.83 U.S. cents.
On the data front, investors will be looking to Canadian and U.S. leading indicators for September, U.S. jobless claims and the Philadelphia Fed business index.
Canadian bond prices were mixed across the curve. The two-year bond CA2YT=RR was down 2 Canadian cents to yield 1.389 percent, while the 10-year bond CA10YT=RR gained 7 Canadian cents to yield 2.754 percent.
"There are really no big movements in bond markets, at least in North America," added Chandler.
"The biggest event today would be mostly performance of equities and if there are any statements regarding currencies coming out of the G20."
(Reporting by Claire Sibonney, Editing by Chizu Nomiyama)
