* 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 currencyclosed 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 bondwas down 1 Canadian cent to yield 1.742 percent, while the 10-year bond was up 20 Canadian cents to yield 3.168 percent.
In new corporate issues, Tim Hortons Inc, 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)
Our Standards: The Thomson Reuters Trust Principles.