By Chris Fournier Dec. 10 (Bloomberg) -- Canada’s dollar rose against its U.S. counterpart as crude oil advanced and global stocks gained, increasing the currency’s appeal. “Crude’s up, and that’s going to underpin the Canadian dollar,” said Jack Spitz, managing director of foreign exchange at National Bank of Canada in Toronto. Investors “seem to be biased toward buying equities rather than selling them, so that would be helping the Canadian dollar as well.” The Canadian dollar climbed 0.2 percent to C$1.2598 per U.S. dollar at 10:40 a.m. in Toronto, from C$1.2626 yesterday. One Canadian dollar buys 79.51 U.S. cents. National Bank predicts the currency will strengthen to C$1.22 by year-end as equities rally. Crude oil futures for January delivery rose as much as 7 percent to $43.07 a barrel in electronic trading on the New York Mercantile Exchange. Oil accounts for 21 percent of the Bank of Canada’s Commodity Price Index, the largest component. The Canadian dollar rises 0.3 cents for every $1 gain in the price of the commodity, according to a study by TD Securities Inc., a unit of Canada’s second-largest bank. The Standard & Poor’s 500 Index added 1 percent, while the S&P/TSX Composite Index increased 1.4 percent. The MSCI World Index, a gauge for 23 developed markets, advanced 1.1 percent. “I’m still watching stocks, and I’m still looking for the U.S. dollar to test lower against the Canadian dollar,” said Jonathan Gencher, Toronto-based director of currency sales at BMO Capital Markets, a unit of Canada’s fourth-biggest bank. Loonie’s Decline After climbing 17 percent in 2007, Canada’s dollar has depreciated 21 percent this year. Prices of commodities, which generate about half Canada’s export revenue, have plummeted as a global recession reduced demand. The Canadian dollar may recover some of its recent losses, according to CIBC World Markets analysts Shane Enright in Toronto and Adam Fazio in New York. “While we maintain a medium-term bullish view on the U.S. dollar, we hold a bias for modest Canadian dollar strength over the remainder of the week,” the analysts wrote in a note today. The loonie may appreciate to C$1.2225 before weakening to at least C$1.30 in early 2009, according to CIBC. Canadian labor productivity was unchanged in the third quarter, Statistics Canada said today. The measure hasn’t increased since the first quarter of 2007, the longest stretch in 27 years. The median forecast of 12 economists surveyed by Bloomberg News was for a 0.2 percent increase. The yield on the two-year government bond rose three basis points, or 0.03 percentage point, to 1.57 percent in Toronto. The yield touched 1.466 percent on Dec. 5, the lowest level since Bloomberg began compiling the data in 1989. The price of the 2.75 percent security due in December 2010 declined 6 cents to C$102.29. To contact the reporter on this story: Chris Fournier in Montreal at cfournier3@bloomberg.net

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