UPDATE 1-CANADA FX DEBT-C$ surges to 6-week high after Bank of Canada rate decision

    * Canadian dollar at C$1.3274, or 75.35 U.S. cents
    * Bond prices mixed

 (Updates with gains following central bank rate decision)
    TORONTO, April 12 (Reuters) - The Canadian dollar
strengthened on Wednesday to a six-week high against its U.S.
counterpart after the Bank of Canada held interest rates
unchanged and offered a tentative nod to recent signals of
strength in the economy.
    The Canadian dollar          gained around 0.40 percent
against the U.S. dollar, last trading at C$1.3271 to the
greenback, or 75.35 U.S. cents, stronger than Tuesday's close of
C$1.3332, or 75.01 U.S. cents. It marked the strongest level for
the currency since Feb. 28.
    The Bank of Canada, as expected, held rates steady and said
recent economic growth has been faster than expected. Still, it
cautioned that it was too soon to conclude the Canadian economy
was on a sustainable growth path.            
    The dollar was "reacting to the headlines, certainly a nod
from the bank to stronger growth trends recently," said Shaun
Osborne, chief currency strategist at Scotiabank.
    "The headline suggests the bank is taking a positive outlook
on the Canadian economy, but I think a deeper read on this
suggests not an awful lot is going to change here. And it
certainly doesn't bring rate increases any closer than we were
before. We may see a bit of a counter reaction (on the currency)
when people have a deeper read of this." 
    Gains for Canada's risk-sensitive currency came as a break
in alarming international political news cooled a safe-haven
rally that saw the yen and gold at five-month highs and
top-rated government bond yields at their lowest this year.
    Canadian home prices rose in March, extending their climb in
major cities in Ontario and British Columbia, according to data
which was likely to add to concerns about housing affordability
in some parts of the country.             
    Canadian government bond prices were mixed, with the
two-year            down 2.5 Canadian cents to yield 0.745
percent and the 10-year             unchanged to yield 1.545

 (Reporting by Fergal Smith and Dan Burns; Editing by W Simon
and Andrea Ricci)