* C$ rallies as high as 89.18 U.S. cents.
* More than 1 U.S. cent above overnight low
* Bond prices turn mostly lower (Recasts)
By Frank Pingue
TORONTO, May 26 (Reuters) - The Canadian dollar bounced up from early losses versus the greenback on Tuesday morning as upbeat U.S. data whetted risk appetite.
The turnaround in the Canadian currency followed figures that showed U.S. consumer confidence soared in May to its highest level in eight months. [ID:nN26484791]
That report sent the Canadian dollar as high as C$1.1213 to the U.S. dollar, or 89.18 U.S. cents, which was comfortably above the C$1.1356 to the U.S. dollar, or 88.06 U.S. cents, that it fell to overnight.
"It looked again like a risk aversion day and now we are right back into things are good and the world is safe," said Steve Butler, director of foreign exchange trading at Scotia Capital. "It's amazing how quickly the market just turns a cheek and looks away when we get another bit of good news out of the United States."
The drag on the Canadian currency overnight was pegged to lower oil prices and falling stocks overseas as tension over North Korea's nuclear tests fueled more debate over the global economic outlook.
That sentiment carried into the North American session as stocks opened lower, but the U.S. consumer confidence data was enough to trigger a turnaround in sentiment.
By 11:10 a.m. (1510 GMT), the Canadian unit was at C$1.1233 to the U.S. dollar, or 89.02 U.S. cents, up from C$1.1235 to the U.S. dollar, or 89.01 U.S. cents, at Monday's close.
The Canadian dollar is likely to be influenced by moves in equities and the U.S. dollar due to lack of any Canadian economic data.
Canada's current account balance for the first quarter is due on Friday, but first-quarter GDP figures next Monday will likely be more important for market direction ahead of the Bank of Canada's next interest rate announcement on June 4.
BOND PRICES TURN LOWER
Canadian bond prices relinquished early gains and were down across much of the curve given the better-than-expected U.S. data, which sapped demand for secure government debt.
The U.S. report boosted North American equities, including a gain of more than 1 percent on Toronto's main stock index. [ID:nTOR004583]
The benchmark two-year government was up 2 Canadian cents at C$100.17 to yield 1.164 percent, while the 10-year bond slipped 10 Canadian cents to C$103.80 to yield 3.302 percent.
The 30-year bond was off 30 Canadian cents at C$116.90 to yield 3.993. (Additional reporting by Ka Yan Ng; editing by Peter Galloway)