CANADA FX DEBT-C$ gains but under pressure, bonds fall

* Canadian dollar recovers but under pressure

* Bonds fall, unwind Monday's massive gains

* No economic releases to drive direction

TORONTO, Dec 2 (Reuters) - The Canadian dollar recovered
some ground versus the U.S. dollar on Tuesday but remained
range-bound and at risk of pressure from falling oil prices and
political uncertainty in Canada.

Canadian bond prices fell as stock markets rallied,
reversing their direction of Monday, when investors parked
their cash in safe-haven government debt in response to a steep
drop in the equity markets.

At 9:40 a.m. (1440 GMT), the Canadian dollar was at
C$1.2412 to the U.S. dollar, or 80.57 U.S. cents, up from
C$1.2451, or 80.31 U.S. cents, at Monday's close. It was the
weakest close versus the greenback in 10 days.

There was no Canadian economic news to drive the currency
on Tuesday, but themes of falling commodities and political
uncertainty carried over from the previous session.

Canadian Governor General Michaelle Jean said on Tuesday
she would cut short a foreign trip and return to Canada to help
resolve a major political crisis. [ID:nN02696]

The country's three opposition parties say the minority
Conservative government has failed to produce aid during the
economic crisis and the three have agreed to form a coalition
in an attempt to take power.

"(Coalition government) is at play as well. But the main
factors are the collapse in commodity prices and risk aversion
towards the U.S. dollar," said Sal Guatieri, senior economist
at BMO Capital Markets.

U.S. crude oil CLc1 was under pressure on Tuesday,
extending Monday's 9 percent slide, and remained around $49 a
barrel.[ID:nSP196932] Canada is a major oil producer and its
currency is often influenced by moves in the oil price.

The Reserve Bank of Australia cut interest rates by a bold
100 basis points, and all eyes will now turn to other central
banks that are set to cut rates to stave off recession. The
Bank of Canada will announce any changes to its overnight rate
next week, while the Bank of England and the European Central
Bank are on tap for Thursday.

BONDS FALL

Canadian bond prices fell in response to rising global
stock markets, partially reversing the previous session's
massive gains in bond prices on the allure of safe-haven
government debt.

European stocks gained, and the Toronto Stock Exchange's
main index jumped at the open [ID:nTOR003927] before falling
back.

The two-year bond dipped 1 Canadian cent to C$102.25 to
yield 1.598 percent. The 10-year bond fell 40 Canadian cents to
C$108.55 to yield 3.198 percent.

The yield spread between the two-year and 10-year bond was
170 basis points, down from 171 at the previous close.

The 30-year bond lost 80 Canadian cents to C$120.75 to
yield 3.801 percent. In the United States, the 30-year Treasury
yielded 3.272 percent.
(Reporting by Ka Yan Ng; editing by Peter Galloway)