* Canadian dollar above par at $1.0006
* Hits highest level since April 21, calendar year high
* Muted volumes in bond market (Updates with further Canadian currency gains)
TORONTO, Dec 31 (Reuters) - Canada's dollar extended gains and held at its highest level since April against the U.S. currency on Friday in scant New Year's Eve trading volume.
The Canadian dollar reached as high as C$0.9931 to the U.S. dollar, its peak since April 21, to match the technical support level that has held since then.
Analysts noted the move comes under very thin trading conditions on the last day of the year. The gains were also made as the U.S. dollar fell broadly on Friday as investors closed their books on 2010, with the Australian dollar hitting a 28-year high against the greenback. [FRX/]
"Canada is kind of in the middle of the pack ... but you're getting that sense that, after a long year and some very shallow trading, there's this sentiment of a weaker U.S. dollar heading into year-end," said David Tulk, senior macro strategist at TD Securities.
At 11:15 a.m. (1615 GMT), the Canadian dollar CAD= CAD=D3 was at C$0.9937 to the U.S. dollar, or $1.0006, up from Thursday's close at par, which was the loonie's first finish at the one-for-one level since Nov. 10.
"The market does appear to have some optimism built into it, just like yesterday. We've seen a bit of a breakout in terms of the dollar/Canada range that has dominated in the last few sessions ... but it's thin and it's the year-end," said Jack Spitz, managing director of foreign exchange at National Bank Financial.
Slim trading volumes ahead of the New Year's holiday may bring choppy conditions for the Canadian dollar but, overall, analysts expect the currency will hover around parity into 2011.
The Canadian dollar's move also came as the price of oil cut early losses. Other commodity-linked currencies, such as the Australian dollar, remained in favor on expectations that Asia will lead a robust global recovery in 2011.
Canadian government bond prices were little changed in quiet trade. Minimal volumes were expected with an early bond market close. The two-year bond CA2YT=RR was up 3 Canadian cents to yield 1.698 percent, while the 10-year bond CA10YT=RR was up 11 Canadian cents to yield 3.145 percent. (Reporting by Ka Yan Ng; editing by Rob Wilson)