CANADA FX DEBT-C$ boosted by fundamentals, Russia reserves

 * C$ higher at 99.04 U.S. cents

 * Bonds lack direction in quiet trading

 * Volumes thin due to U.S. holiday
 (Updates to close, adds commentary)

 TORONTO, Nov 25 (Reuters) - The Canadian dollar rallied
against the greenback for a second day on Thursday, driven by
healthy economic data, firm commodity prices and confirmation
that Russia has begun adding the currency to its forex
reserves.

 Some strong Canadian economic data, including figures on
Tuesday that showed an unexpected jump in inflation, has
spurred some speculation that the Bank of Canada could resume
its rate-hiking campaign sooner than recently thought, which
would mean more upside for the currency.

 David Watt, senior fixed income and currency strategist at
RBC Capital Markets, says longer-term two-year interest rate
spreads across a broad range of crosses highlight a favorable
story for Canada.

 "The backdrop is more Canadian-dollar positive than it has
been," said Watt, noting that a modest risk-on tone in the
market overall has played a role as well.

 Analysts said some positive U.S. data on Wednesday,
including weekly jobless benefits dropping to the lowest level
in more than two years, have also given the Canadian dollar a
boost as a North American play.

 Firm commodity prices lent further support on Thursday as
oil inched up in thin and volatile trading due to the U.S.
Thanksgiving holiday.

 The currency CAD=D4 closed the North American session at
C$1.0097 to the U.S. dollar, or 99.04 U.S. cents, slightly
higher than Wednesday's finish of C$1.0111 to the U.S. dollar,
or 98.90 U.S. cents.

Against the euro, the Canadian dollar touched a three-month
high, at C$1.3407, or 74.59 euro cents, as the euro zone debt
crisis showed little signs of abating.

 Canada's negligible exposure to peripheral European debt,
along with a robust financial sector and a stellar fiscal
environment continue to showcase the country as an attractive
investment destination, Watt said.

 An official statement from Russia's central bank that it
has begun buying Canadian dollars for its international
currency reserves -- a move that has been expected since last
year -- was also a positive factor. [ID:nLDE6AO0VK]

 "The impact of the Russian statement itself is going to
generate very little to no specific Canadian dollar flow ...
it's not going to be the Russians buying driving the Canadian
dollar," Watt said. "What you're going to see is the backdrop,
which is reserve diversification toward the Canadian dollar,
again affecting sentiment."

 Canadian bond prices lacked significant direction in sleepy
trading given the U.S. market closure.

 The two-year government of Canada bond CA2YT=RR was down
1 Canadian cent to yield 1.742 percent, while the 10-year bond
CA10YT=RR was up 20 Canadian cents to yield 3.168 percent.

 In new corporate issues, Tim Hortons Inc THI.TO, Canada's
largest restaurant chain, priced a C$100 million offering of
senior unsecured notes, according to a term sheet seen by
Reuters. [ID:nN25280805]
 (Reporting by Claire Sibonney; editing by Peter Galloway)