CANADA FX DEBT-C$ gains on US$, helped by upbeat economic data

* C$ at C$1.0166 vs US$, or 98.37 U.S. cents
    * Rising expectations of a Bank of Canada rate hike underpin
    * Jitters over central bank policy roil global markets again

    By Alastair Sharp
    TORONTO, June 13 (Reuters) - The Canadian dollar gained
against its U.S. counterpart on Thursday as a spate of
encouraging economic data boosted North American equities and
helped stoke bets on a sooner-than-expected interest rate hike
in Canada.
    The commodity-linked currency was also buoyed by a recovery
in the price of oil, though traders also pointed to a breakdown
in historical links to other assets making it difficult to
predict where the loonie, as Canada's currency is colloquially
known, would move next.
    "It doesn't seem as though there is any correlation at all
with anything out there," said David Bradley, a director of
foreign exchange trading at Scotiabank.
    He said investors were preoccupied with whether and when the
Federal Reserve will scale back its monetary stimulus. The U.S.
central bank's policy-setting committee meets next week. 
    The greenback fell sharply against the Japanese yen 
as recent signs from each country's central bank that easing
could slow led some investors to reverse heavy bets on a further
fall in the yen. 
    The Canadian dollar strengthened almost half a
percent, ending the session trading at C$1.0166 to the
greenback, or 98.37 U.S. cents, compared with C$1.0212, or 97.92
U.S. cents, at Wednesday's North American close.
    The Canadian government on Thursday reported that industrial
capacity usage, particularly in mining, oil and gas extraction,
rebounded in the first quarter from a weak second half of 2012,
and housing prices rose more than expected.
    These reports mirrored a trend of improving Canadian
economic data, which included a blockbuster gain in employment
in May and stronger housing data.
    "People are starting to factor in rate increases in Canada
again, which has helped, but we're not really pushing any new
ground at the moment," said Shaun Osborne, chief currency
strategist at TD Securities.
    Overnight index swaps, which trade based on expectations for
the central bank's key policy rate, have risen recently as solid
economic data has led some investors to bet on a rate hike
sooner than previously expected. 
    A Reuters poll on May 23 showed most economists don't expect
the Bank of Canada to hike rates until the fourth quarter of
2014 due to tepid economic growth and low inflation.  
    The two-year bond was up 8 Canadian cents to
yield 1.134 percent, while the benchmark 10-year bond
 rose 55 Canadian cents to yield 2.148 percent.