By Karen Johnson TORONTO-- The Canadian dollar held onto its modest overnight gains early Friday as an initial reading of U.S. gross domestic product showed the world's largest economy expanding at a slightly better pace than expected in the second quarter. The currency reaction was muted, in part because the report, while a source of some relief for the market, does not advance expectations the Federal Reserve might adopt further stimulus when it meets next week. The U.S. dollar was at C$1.0070 Friday morning, right where it stood before the data. It was at C$1.0099 late Thursday, according to data provider CQG. The U.S. GDP came in at 1.5%. The median estimate of economists surveyed by Dow Jones Newswires was for growth of 1.3% from the first quarter, which had shown growth of 1.9%. The Canadian dollar eked out modest gains overnight, as the market further contemplated the prospect of further actions from the European Central Bank after comments Thursday from ECB President Mario Draghi. Speaking in London, Mr. Draghi told business and political leaders the central bank would do "whatever it takes" to preserve the euro. His words lifted expectations the central bank might revive its government-bond-purchase program or adopt other measures to drive down sovereign borrowing costs. That touched off a rally in equities and other higher-yielding assets, including the Canadian dollar. The rally was tempered overnight as a Bundesbank spokesman said Germany's central bank would continue to oppose to further government bond purchases by the ECB. Write to Karen Johnson at karen.johnson@dowjones.com

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