* C$ up at 95.58 U.S. cents
* Bonds flat across the curve
TORONTO, Dec 24 (Reuters) - The Canadian dollar extended gains on Thursday morning, touching its highest level in nearly three weeks, as the unit rose on broad weakness in the U.S. dollar.
With marginal moves in global equity, oil and gold prices, the Canadian dollar is largely being swayed by moves in the greenback, said Matthew Strauss, senior currency strategist at RBC Capital Markets.
It's "just reaction to a broad-based U.S. dollar selloff," Strauss said.
The greenback fell on Thursday, coming off three-month highs against a basket of currencies after weak U.S. housing data in the previous session dampened optimism about the outlook for the U.S. economy. [FRX/]
In thin pre-holiday trade, investors awaited U.S. weekly jobless claims and durable goods data.
World stocks pushed to their highest level in nearly three weeks, while oil prices sagged and gold edged slightly higher. [MKTS/GLOB] [O/R] [GOL/]
The Canadian dollar also built on momentum after comments by Finance Minister Jim Flaherty, who said that China and Russia may diversify their currency reserves into Canadian dollars. [FRX/]
Those comments built on remarks by Prime Minister Stephen Harper that Ottawa will be fiscally disciplined as the government continues stimulus spending until 2011.
"It clearly seems as if Canada is back in favor and is the flavor of the month in the currency world, so the markets are quick to latch on to positive Canadian dollar news," said Strauss.
The Canadian dollar touched its highest level since early December. At 7:56 a.m. (1256 GMT), the Canadian dollar was at C$1.0462 to the U.S. dollar, or 95.58 U.S. cents, up from Wednesday's finish at C$1.0484 to the U.S. dollar, or 95.38 U.S. cents.
With no major domestic economic data on tap, Canadian bond prices were largely flat across the curve as investors were unwilling to make major bets in holiday-shortened trade. (Reporting by Jennifer Kwan; Editing by Padraic Cassidy)
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