* C$ closes at C$0.9731 to the U.S. dollar, or $1.0276
* Bond prices fall as investors seek riskier assets
TORONTO, June 9 (Reuters) - Canada's dollar strengthened on Thursday as oil prices firmed and investors waded back into riskier assets, helping boost the currency ahead of Friday's key employment report for May.
U.S. crude climbed over 1 percent on supply worries after OPEC ministers failed on Wednesday to agree on output targets.[O/R]
Other commodities also gained. The benchmark Thomson Reuters-Jefferies CRB index, which tracks a basket of 19 commodities, rose 0.72 percent to its highest level since May 5 as risk appetite improved, which also sent equity markets higher.
Canada's economy is heavily reliant on resource exports and its currency is sensitive to swings in their prices.
"On days where we get risk appetite, the Canadian dollar tends to do OK, and we get an extra fill-up if commodity prices are reasonably firm," said Mark Chandler, head of Canadian fixed income and currency strategy, at RBC Capital Markets.
The Canadian dollarended the North American session at C$0.9731 to the U.S. dollar, or $1.0276, up from Wednesday's close of C$0.9797 to the U.S. dollar, or $1.0207.
The currency briefly weakened after Canadian data showed the country's trade deficit had widened unexpectedly in April, largely due to supply chain disruptions after the Japanese earthquake and tsunami in March. [ID:nN09150409]
"We had relatively bad trade numbers, but a lot of it is coming from revision from previous month, which was already hinted in last week's GDP," said Charles St-Arnaud, Canadian economist and currency strategist in New York at Nomura Securities International.
He noted that the currency bounced back after the market assessed the data was not as negative as it first appeared.
Friday's data -- Canadian jobs figures for May -- has the potential to have a bigger impact on the currency as investors look for clues as to when the Bank of Canada might next raise interest rates. [ID:nN03165332]
Economist polled by Reuters forecast 20,000 jobs were created in the month.
Market players have been pushing out their expectations for when the Bank of Canada will resume raising interest rates as North American economic data has generally disappointed, preventing the currency from making gains. [CA/POLL]
Higher interest rates tend to boost currencies by attracting investors to short-term deposits. The central bank increased its key policy rate three times last year, stopping in September at 1 percent.
In the United States, softening economic growth has pushed the Federal Reserve to the sidelines.
Anything that could breathe some life back into the story of the Bank of Canada raising interest rates independently and fairly early relative to the Fed has the potential to boost the currency, RBC's Chandler said.
South of the border, U.S. jobless claims rose unexpectedly, stoking fears of a stalled economic recovery. But a separate report showed record U.S. exports in April. The United States is Canada's biggest trading partner. [ID:nN09117731]
Canadian bond prices fell across the curve, shadowing U.S. Treasuries, as rising equity markets lessened the allure of safe-haven government debt. [US/]
Stocks in Toronto rose after seven days of declines, while Wall Street saw gains after six-straight drops. [.TO]
The two-year bondwas down 3 Canadian cents to yield 1.445 percent, while the 10-year bond shed 31 Canadian cents to yield 3.042 percent. (Additional reporting by Solarina Ho; Editing by Jeffrey Hodgson)
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