C$1=US$1 for first time in 31 years

By Louise Egan and Cameron French

OTTAWA/TORONTO (Reuters) - The Canadian dollar hit parity with the U.S. dollar for the first time in 31 years on Thursday and is expected to remain strong, delighting Canadians used to being mocked for their "northern peso."

The loonie, so called because of the bird engraved on the one-dollar coin, capped a 62 percent rise from 2002 on the back of booming commodity prices and a deepening disenchantment with the greenback.

Canada, a major oil producer, is benefiting from record high oil prices and a China-led building boom that has boosted base metal prices.

"The huge increase in commodity prices in general have fed the acceleration of the Canadian dollar," said Carlos Leitao, chief economist at Laurentian Bank of Canada.

"The fact that economic growth in Asia and in general has accelerated has fed this large appetite for natural resources, particularly energy, which we have a lot of."

But the strong currency is seen as a huge threat to Canadian exporters and the parity benchmark adds to pressure on the Conservative government to help out manufacturers. Over 80 percent of Canada's exports are sold to the United States.

Finance Minister Jim Flaherty declined to talk the currency down, saying the real story was the "dramatic decline" in the U.S. dollar, but he said the rapid rise by the Canadian dollar also reflected the strongest economic fundamentals in the Group of Seven leading industrialized nations.

"Clearly they (the markets) are looking at the strength of the Canadian economy," he told a crush of reporters.