CANADA FX DEBT-C$ higher but gives up early gains; bonds firm

* C$ at C$1.0438 per US$, or 95.80 U.S. cents

* Bonds prices firm across curve (Updates to midday)

TORONTO, July 21 (Reuters) - The Canadian dollar was slightly higher against the U.S. currency at midday on Wednesday, but well off a near one-week high, as it retreated with weakening equities and declining oil prices.

Overnight, the Canadian dollar had jumped almost a penny to touch a session high of C$1.0351 to the U.S. dollar, or 96.61 U.S. cents.

The early gains came from rallying global stocks and oil prices, after healthy earnings from Apple Inc AAPL.O, and other companies whetted investor appetite for riskier assets and currencies.

But the optimism faded as North American stocks turned lower on uncertainty ahead of U.S. Federal Reserve Chairman Ben Bernanke’s testimony before Congress at 2 p.m. (1800 GMT).

In addition, oil slipped to around $77 a barrel after data showed a surprise increase in U.S. crude supplies after widespread predictions of a drawdown. The price of oil often offers direction for the commodity-linked Canadian dollar. [O/R]

At 11:50 a.m. (1550 GMT), the Canadian dollar CAD=D4 was at C$1.0438 to the U.S. dollar, or 95.80 U.S. cents, up slightly from Tuesday's finish at C$1.0448 to the U.S. dollar, or 95.71 U.S. cents.

“Equity markets are bailing, that is first and foremost the biggest correlation factor,” said Jack Spitz, managing director of foreign exchange at National Bank Financial.

“With the S&P down in negative territory, combined with weakness in crude and gold markets, and a move higher in the volatility index, they are all contributing to weakness in the Canadian dollar.”

A weak tone to Canadian wholesale trade data also weighed, as data released Wednesday morning showed wholesale trade unexpectedly slipped 0.1 percent in May from April. [ID:nN2136413]

Canadian bond prices were mostly higher, extending gains after the Bank of Canada raised interest rates on Tuesday but issued a slightly more subdued outlook on the world economy.

The declines in North American equities also helped boost the allure of safe-haven assets such as government debt.

The two-year bond CA2YT=RR rose 14 Canadian cents to yield 1.527 percent, while the 10-year bond CA10YT=RR gained 15 Canadian cents to yield 3.178 percent. (Reporting by Ka Yan Ng and Claire Sibonney; editing by Rob Wilson)