July 21 (Bloomberg) -- Canada's dollar appreciated to the strongest in more than three years versus the greenback after a reports or progress in addressing the Greek debt crisis added to demand for riskier assets. The loonie, as the currency is commonly called, weakened against the euro for a second day. The currency rose for a third day versus its U.S. counterpart after statements from the Bank of Canada prompted investors to move forward the date of expected interest rate increases. Crude oil, Canada's largest source of export revenue, rose for a third day. "All eyes are on euro and what's going on over there and their discussions," C.J. Gavsie, managing director for foreign exchange trading at Bank of Montreal, said by phone from Toronto. "It's the perception of when rate hikes may occur here in Canada," he said, explaining the currency's performance this week. "The fixed-income community on a global scale will be adding to long Canada positions, and therefore requiring Canadian dollars to do so." A long position is a bet that an asset will increase in value. The currency rose as much as 0.5 percent to 94.26 cents per U.S. dollar, the strongest level since Nov. 12 2007, and traded at 94.46 cents at 9:49 a.m. in Toronto. It ended yesterday at 94.74 cents. One Canadian dollar buys $1.0587. Crude oil futures gained 1.1 percent to $99.18 a barrel in New York. European Discussions European leaders met in Brussels seeking solutions for their 21-month sovereign debt crisis as Luxembourg Prime Minister Jean-Claude Juncker said a Greek default may be unavoidable. "'You can never exclude such a possibility, but everything should be done in order to avoid such a possibility," Juncker told reporters as he entered the summit today. A draft document of conclusions from the European Union summit today calls for an extension of bailout loans for Greece from the European Financial Stability Facility to 15 years from 7 1/2 years, Reuters reported. The draft said new loans to Greece from the EFSF may be offered at a rate of 3.5 percent, according to Reuters. The EFSF may also be able to intervene in secondary bond markets, depending upon European Central Bank input, and recapitalize financial institutions through government loans, Reuters said. Debt Details "Banks are getting help from the EFSF to recapitalize," said Shaun Osborne , chief currency strategist at Toronto- Dominion Bank, via e-mail. "It wasn't in the earlier details, so it looked like there was a possible issue there. European banks were underperforming earlier in the session. They turned positive after those headlines." Canadian government bonds fell, pushing the yield on benchmark 10-year bonds 3 basis points higher to 2.97 percent. The price of the 3.25 percent security due in June 2021 fell 25 cents to C$102.37. The Bank of Canada on July 19 kept its benchmark policy rate at 1 percent and said borrowing costs will rise, omitting the word "eventually," which had appeared in previous statements. The bank also raised its forecast for inflation. "To the extent that the expansion continues and the current material excess supply in the economy is gradually absorbed, some of the considerable monetary policy stimulus currently in place will be withdrawn," Bank of Canada Governor Mark Carney said in remarks at a press conference yesterday.

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