* C$ closes at C$1.0602, session high was C$1.0516
* Pares gains after stocks turn negative
* Canadian bonds underperform U.S. Treasuries
(Updates to close, adds details quotes)
By Claire Sibonney
TORONTO, June 7 (Reuters) - The Canadian dollar closed
slightly firmer on Monday after a volatile session in which it
took much of its direction from equity markets that clawed out
modest gains before closing weaker.
Toronto's main stock index ended lower as falling energy,
financial and tech shares weighed heavily on the market,
reversing earlier gains built on a rally in gold stocks. [.TO]
"A lot of it is just the equity market movements," said
Sacha Tihanyi, currency strategist at Scotia Capital.
"With the lack of data today, it's kind of been that story
and the story with the U.S. dollar."
The Canadian dollar CAD=D4 closed the North American
session at C$1.0602 to the U.S. dollar, or 94.32 U.S. cents,
slightly firmer than Friday's finish at C$1.0607 to the U.S.
dollar, or 94.28 U.S. cents.
Earlier it hit a session high of C$1.0516, or 95.09 U.S.
cents, buoyed by equity market gains which helped it outperform
against other major currencies, as well as some solid
manufacturing data out of Germany. [ID:nLDE656107]
Overnight the Canadian dollar had weakened to C$1.0680 to
the U.S. dollar, or 93.63 U.S. cents, its weakest since May
In a note to clients, George Davis, chief technical analyst
at RBC Capital markets, said he saw support levels at C$1.0530
and C$1.0414, with resistance levels between C$1.0672 and
Verus the euro, the Canadian dollar touched a session high
of C$1.2569, or 79.56 euro cents. This was just below levels
seen on Friday, when the Canadian dollar hit its strongest
level against the euro since 2001.
The Canadian currency and euro both fell hard on Friday on
a disappointing U.S. jobs report and on comments out of Hungary
that its finances were worse that previously thought,
ratcheting up concerns about the European sovereign debt
Looking ahead, there are no major Canadian data releases
this week. In the United States, market players will be
watching the U.S. retail sales numbers on Friday for more
insight into the health of the world's No. 1 economy.
Otherwise, the events in Europe are expected to be a
dominant driver of currency moves.
Canadian Finance Minister Jim Flaherty said Canada is
concerned about the "continuing economic uncertainty" in
Europe, adding some countries there are under pressure from the
CANADA BONDS LAG U.S.
Canadian bond prices were mostly weaker, mirroring U.S.
Treasuries, which kept yields near their lowest in almost two
weeks as struggling stocks and worries over Europe's fiscal
crisis offset selling ahead of this week's auctions. [US/]
The two-year Canadian government bond CA2YT=RR was down 2
Canadian cents to yield 1.629 percent, while the 10-year bond
CA10YT=RR fell 4 Canadian cents to yield 3.295 percent.
Canadian bonds lagged Treasuries across the curve, with the
Canadian 10-year yield 14.5 basis points about its U.S.
counterpart, compared with 8.20 points above on Friday.
In new issues, Alberta Capital Finance priced C$600 million
of five-year notes, according to a term sheet seen by Reuters.
(Editing by Jeffrey Hodgs