* C$ stood at C$0.9811, or $1.0193
* Reaches highest level since March, 2008
* Recent commodity price spike still supporting
* Shrinking budget deficit provides brief lift
* Bond prices mostly firmer (Updates with details, further analyst comment)
By Solarina Ho
TORONTO, Feb 25 (Reuters) - Canada's dollar hit a near three-year high against its U.S. counterpart on Friday, helped by a narrower budget deficit, oil's recent rise and a growing view it is less vulnerable than many other currencies to global shocks.
The currency broke the C$0.98 barrier even though oil pulled back slightly on Friday after recently hitting two-and-a-half year highs. [O/R]
The Canadian dollar firmed as high as C$0.9792, or $1.0212, its strongest showing since March 2008, just after Canada reported its 9-month budget deficit shrank compared to a year ago. [ID:nOLAPDE77U]
"Canada has benefited a little bit from ... its relative safe haven status, considering all the things going on in the world -- the unrest in the Middle East and Northern Africa," said Steve Butler, director of foreign exchange trading at Scotia Capital.
"We got below 98 (Canadian) cents, but didn't stay there for too long. The market will be a little bit cautious about getting overly extended."
At 12:10 (1710 GMT), the currency CAD=D4 stood at C$0.9811 to the U.S. dollar, or $1.0193, up from Thursday's North American finish of C$0.9832 to the U.S. dollar, or $1.0171.
The gain came after Toronto's main stock index jumped back above 14,000 in a broad relief rally led by the mining-heavy materials sector and influential banks. [.TO]
"Markets right now are recovering from some of the losses from the last couple of days, so that's probably helping to support the Canadian dollar," said Jacqui Douglas, currency strategist at TD Securities.
"The move lower in USD/CAD really has not had too much momentum behind it. It seems like it's been a pretty slow grind lower. All these new multi-year lows seem to be hit in 10 points at a time, 20 points at a time."
Scotia's Butler noted that the market was somewhat cautious heading into the weekend and month-end on Monday.
"That's all about flows and we sort of throw fundamentals out the window," he said. He saw resistance for the Canadian dollar at C$0.9780-C$0.9790 and support levels around C$0.9850-C$0.9860.
Canada reports GDP figures on Monday and the Bank of Canada will be announcing its next rate decision on Tuesday.
"Looking at all the risks out there with the GDP, Bank of Canada, and what's happening globally, I think the risk is a bigger move to the upside (for the U.S. dollar) than a move to the downside," said Douglas.
Canadian bond prices were mostly firmer. The two-year bond CA2YT=RR was up 1.5 Canadian cents to yield 1.791 percent, while the 10-year bond CA10YT=RR added 23 Canadian cents to yield 3.292 percent. (Editing by Jeffrey Hodgson)