* C$ hits intraday high of C$0.9865 vs US$, or $1.0137 * Bond prices climb across the curve By Claire Sibonney TORONTO, Dec 10 The Canadian dollar rallied to a seven-week high against the greenback on Monday after the Canadian government gave the green light to two controversial takeovers in its energy sector. While Canada announced new rules with the approvals of CNOOC Ltd's $15.1 billion bid for Nexen Inc and the $5.3 billion takeover of Progress Energy Resources Corp by Petronas that will curb investments by state-owned enterprises, they will not shut off the foreign investment tap, analysts said. Still, market sources noted that by drawing a line in the sand against future acquisitions by foreign state-owned enterprises, the Canadian government could be seen by some as raising hurdles for takeovers in general. "I think any flow associated with that transaction is CAD positive but I think it is right to not go overboard on the forward-looking implications beyond that because of that very strong qualification that went with it," said Adam Cole, global head of FX strategy at RBC Capital Markets in London. "It's difficult to get that excited in a forward-looking sense about it being that positive for Canada." At 8:08 a.m. (1308 GMT), the Canadian dollar stood at C$0.9873 versus the U.S. dollar, or $1.0129, compared with Friday's North American session close at C$0.9910, or $1.0091. Earlier on Monday, the currency hit C$0.9865, or $1.0137, its strongest level since Oct. 19. Cole said the next significant level of resistance for the Canadian dollar was around C$0.9820, or $1.0183. Canadian bond prices climbed across the curve, tracking U.S. Treasuries on concerns over protracted budget negotiations in Washington, political rumblings in Italy and expectations for further monetary policy easing by the Federal Reserve. The two-year bond was up 3 Canadian cents to yield 1.054 percent, and the benchmark 10-year bond gained 12 Canadian cents to yield 1.696 percent.