* C$ rises to 96.86 U.S. cents
* Risk sentiment up with rallying stocks, U.S. data
* Bond prices edge lower (Updates to close)
By Ka Yan Ng
OTTAWA, July 26 (Reuters) - The Canadian dollar rose to its highest level in more than a week against the U.S. currency on Monday, spurred by more positive news that the global economy is mending.
Risk appetite barometers such as stock markets gained on U.S. government data that showed sales of new single-family homes rebounded strongly in June from May's record low, while a rosier outlook from economic bellwether FedEx Corp. (FDX.N: Quote, Profile, Research, Stock Buzz) also boosted confidence. [ID:nN23137243] .SPX [.N]
"The world feels a little rosier," said Eric Lascelles, chief Canada macro strategist at TD Securities.
The Canadian currency CAD=D4 finished at C$1.0324 to the U.S. dollar, or 96.86 U.S. cents, not far off its best level since July 15 at C$1.0303 to the U.S. dollar or 97.06 U.S. cents.
It was also up moderately from Friday's finish at C$1.0361 to the U.S. dollar, or 96.52 U.S. cents, up for a third straight session.
A steady price of oil, a key Canadian export, close to $79 a barrel was also mildly supportive.
CANADIAN BONDS EDGE DOWN
Bond prices were slightly lower as investor favor flowed to riskier assets as economic sentiment picks up.
Along with the U.S. housing data, better-than-expected purchasing data in the euro zone and growth data in Britain boosted confidence in the world economy.
The two-year bond CA2YT=RR was 3 Canadian cents lower to yield 1.599 percent, while the 10-year bond CA10YT=RR was down 3 Canadian cents to yield 3.231 percent.
Domestic data is otherwise fairly light until Friday's GDP for May. Analysts expect the economy to have grown 0.1 percent in the month, in line with a slower pace than in the first three months of the year.
"It'll grow but not by a whole lot. My gut instinct is to say that there are going to be some worriers wondering whether Canada is double-dipping already. I think that's an overblown concern," said Lascelles.
"It's certainly true that the rate of growth has slowed, but we are still seeing quite impressive job gains. Leading indicators are still looking fairly good, credit is still flowing." (Reporting by Ka Yan Ng; editing by Rob Wilson)