CANADA FX DEBT-C$ hits 1-week high as oil prices rise

* C$ off high at C$0.9792 to the U.S. dollar, or $1.0212

* Bond prices flat to higher

* Foreigners sell Canadian securities in June

TORONTO, Aug 17 (Reuters) - Canada’s dollar touched its highest level in more than a week on Wednesday morning, helped by stronger oil prices, but it then backed off, restrained by anxiety over the state of the global economy.

Government bonds were flat to higher, reflecting some disappointment that at a summit meeting on Tuesday France and Germany had stopped short of increasing the size of the euro zone’s rescue fund and had rejected for now the idea of a common euro bond. [ID:nL5E7JG0IH]

The currency rose as high as C$0.9776 to the U.S. dollar, or $1.0229, before retreating to near its 200-day moving average around C$0.9810.

The price of oil was up more than 2 percent to above $88 a barrel on Wednesday after industry data released the previous day showed U.S. gasoline stocks fell sharply last week.

North American stocks also opened higher, lending some support to risk assets.

“Certainly the intense focus on financial instability has faded. So dollar/CAD coming back from its recent highs does make sense,” said David Watt, senior currency strategist at RBC Capital Markets. “But again, CAD is a still a cyclical currency and we’re still having a number of concerns about the global economic outlook.”

World stocks dipped while top-rated government bonds rallied on Wednesday as investors grew concerned that French and German plans for closer fiscal integration may be insufficient to stop the regional debt crisis from spreading further. [MKTS/GLOB]

For the first time since March 2010, foreigners reduced their holdings of Canadian securities in June, selling C$3.5 billion ($3.6 billion) worth after buying C$15.3 billion in May, Statistics Canada said on Wednesday. [ID:nN1E77G03R]

Investors had been piling money into Canada, apparently eyeing its sound economy, banks, fiscal outlook and currency. Even with June’s reversal, the first half of the year showed C$41.2 billion of foreign investment in Canadian securities.

At 9:35 a.m. (1435 GMT), the Canadian currency CAD=D4 was at C$0.9792 to the U.S. dollar, or $1.0212, up from Tuesday's North American finish at C$0.9821 to the U.S. dollar, or $1.0182.

Canada's two-year bond CA2YT=RR was unchanged to yield 0.998 percent, while the 10-year bond CA10YT=RR advanced 21 Canadian cents to yield 2.434 percent.

A C$3.5 bln tranche of two-year government of Canada Canada bonds will be auctioned at noon. (Reporting by Ka Yan Ng; editing by Peter Galloway)