CANADA FX DEBT-C$ rises on European bailout hopes

 * C$ rises to C$1.0210 vs US$, or 97.94 U.S. cents

 * Bonds prices fall across curve

 By Claire Sibonney

 TORONTO, Sept 27 (Reuters) - The Canadian dollar rallied
against the U.S. currency on Tuesday alongside equities and
commodity prices as European officials discussed new action to
cut Greece's debt and recapitalize the region's banks.

 The officials were seen to be considering plans to boost
the size of the European Financial Stability Facility bailout
fund and recapitalize banks, which could also help lower yields
of Italian and Spanish bonds. For details, see [ID:nL5E7KR1CV]

 As well, Greek lawmakers were expected to approve a deeply
unpopular property tax to open the way for the return of
international lending inspectors and the release of vital aid
despite growing anger sweeping the austerity-hit nation.
[ID:nL5E7KR0FY]

 "We're waiting for some pretty important developments
still, but I think the market has obviously taken a little bit
of a more positive turn in the last two days, and with that
Canada has done a little bit better," said Steve Butler,
director of foreign exchange trading at Scotia Capital, noting
a big spike up in commodity prices.

 Prices for oil, gold and copper -- key Canadian exports --
were all sharply higher. [O/R] [GOL/] [MET/L]

 At 8:35 a.m. (1235 GMT), the Canadian dollar CAD=D4 stood
at C$1.0210 to the U.S. dollar, or 97.94 U.S. cents, up from
C$1.0283 to the U.S. dollar, or $97.25 U.S. cents, during
Monday's North American session.

 Butler noted the Canadian dollar broke through important
resistance in the C$1.0220-25 area, and that markets would be
disappointed with a close weaker than that level.

 The next resistance comes in around C$1.0140 and C$1.0085,
which marked the currency's low on the day it began its steep
selloff last week.

 Bond prices slipped across the curve as risk sentiment
improved. The two-year Canadian government bond CA2YT=RR was
down 10 Canadian cents to yield 0.980 percent, while the
10-year bond CA10YT=RR dropped 58 Canadian cents to yield
2.212. percent.
  (Reporting by Claire Sibonney; editing by Jeffrey Benkoe)