CANADA FX DEBT-C$ reverses from CPI-induced gains, bonds mixed

 * C$ retrenches after briefly reaching session high

 * Bonds mixed

 * Canada inflation at 2-year high, prompts rate talk

 * Markets jolted by Korean tensions, euro zone concerns

 TORONTO, Nov 23 (Reuters) - Canada's dollar firmed briefly
to a session high against the U.S. currency on Tuesday and
short-term government bond yields were higher, after data
showed the domestic inflation rate in October jumped to a
two-year high.

 Canada's annual inflation rate in October rose to a
two-year high of 2.4 percent from 1.9 percent in September on
higher prices for gasoline and energy, Statistics Canada said.
The annual core inflation rate rose to 1.8 percent from 1.5
percent in September.  [ID:nSCLNME67E]

 The Canadian dollar rose as high as C$1.0162 to the U.S.
dollar, or 98.41 U.S. cents, after the data, immediately
spiking from around C$1.0190 to the U.S. dollar, or 98.14 U.S.
cents.

 However, by 8:00 a.m. (1300 GMT), the Canadian dollar
CAD=D4 was at C$1.0204 to the U.S. dollar, or 98.00 U.S.
cents, down from Monday's close at C$1.0175 to the U.S. dollar,
or 98.28 U.S. cents.

 "It's been helped out by the CPI data but it's lost that
pop," said Sacha Tihanyi, currency strategist at Scotia
Capital.

 "It's still a very good data print for Canada. It's
certainly higher than the Bank of Canada's average outlook for
what's going to happen in Q4 for the price increases so it's
constructive as far as that goes. But of course one data point
does not make a trend."

 Analysts differed on whether the data would prompt the Bank
of Canada to raise interest rates sooner than expected, and the
impact on the Canadian dollar was only fleeting as attention
returned to external influences. [ID:nN23115741]

 Market players were also monitoring rising tensions in the
Korean peninsula after North Korea fired dozens of artillery
shells at a South Korean island, in one of the heaviest attacks
on its neighbour since the Korean War ended in 1953.

 The incident addded to pressures already boiling in global
financial markets from concerns that a rescue package for
Ireland may not stop problems from spreading to other indebted
euro zone countries. [MKTS/GLOB]

 Short-dated Canadian government bond yields were mostly
higher after the data, with the rate sensitive two-year yield
CA2YT=RR rising to 1.627 percent from 1.576 percent just
before the report.

 Yields on long-dated maturities were lower, following the
trend in U.S. Treasuries, as safe haven flows were ignited by
news of Korea tensions. The 10-year bond CA10YT=RR yielded
3.066 percent.

 (Reporting by Ka Yan Ng, Editing by Chizu Nomiyama)