CANADA FX DEBT-C$ boosted by risk appetite, Bank of Canada on tap

* Canadian dollar at C$1.0908 or 91.68 U.S. cents
    * Bond prices lower across the maturity curve

    By Leah Schnurr
    TORONTO, Sept 3 (Reuters) - The Canadian dollar strengthened
against the greenback on Wednesday, boosted by renewed risk
appetite on hopes for a de-escalation of geopolitical tensions,
but the main focus was on the Bank of Canada's monetary policy
statement later in the morning.
    Markets broadly were lifted after Ukraine said its president
had agreed with Russia's Vladimir Putin on steps towards a
"ceasefire regime" in Kiev's conflict with pro-Russian rebels.
But the Kremlin denied any actual truce deal. 
    The news was resulting in "a reason for this flight out of
safety and Canada is benefiting a bit," said Don Mikolich,
executive director of foreign exchange sales at CIBC World
Markets in Toronto.
    "I don't know if it's going to necessarily have a lasting
impact but it looks like the market was looking for a relief
from that." 
    A Bank of Canada interest rate decision, due at 10:00 am ET
(1400 GMT), will be the main domestic event of the day. While
the central bank is widely expected to hold rates at 1 percent,
where they have been since 2010, investors will parse the tone
of the bank's statement.
    Although the bank is expected to stick to a cautious
message, "it's getting harder for them to keep up the dovish
rhetoric in light of the fact that we have ... relatively good
economic data, although still some slower pockets," said
    The Canadian dollar was at C$1.0908 to the
greenback, or 91.68 U.S. cents, stronger than Tuesday's close of
C$1.0930, or 91.49 U.S. cents.
    The loonie has seen some choppy trading in recent sessions
following a large one-day gain last week due to fund flow
speculation stemming from Burger King's bid to buy Tim
    "With what seems to be a lot of the major flows around the
Tim Hortons deal passing now, with two major Canadian dollar
buying sprees last week, the return to the mid-C$1.09s seemed
like a natural place to go," said Mikolich.
    Canadian government bond prices were lower across the
maturity curve, with the two-year down half a
Canadian cent to yield 1.130 percent and the benchmark 10-year
 down 4 Canadian cents to yield 2.098 percent.

 (Editing by Meredith Mazzilli)