* Canadian dollar at C$1.2119, or 82.52 U.S. cents
* Bond prices lower across the yield curve
* 2-year yield touches 6-year high at 1.643 percent
TORONTO, Sept 11 (Reuters) - The Canadian dollar firmed on Monday against the U.S. dollar, supported by further gains in Canada's bond yields after the country's central bank surprised some investors last week by raising interest rates. A string of robust economic news pushed the Bank of Canada to hike rates for the second time in three months, a move that helped drive the loonie nearly 2 percent higher last week. The July move was the Bank's first hike in nearly seven years. "The story has changed when it comes to Canada's economy," said Brad Schruder, director of corporate sales and structuring at BMO Capital Markets. "Once, the loonie was a global currency that you would look to sell on strength. Now, I think it's fair to say the international community looks to the Canadian dollar as a currency you want to buy on weakness." The 2-year yield, which has jumped as much as 99 basis points since mid-May, touched its highest since June 2011 at 1.643 percent, before pairing gains. The yield stood at 1.548 percent.
At 4 p.m. ET (2000 GMT), the Canadian dollar was
trading at C$1.2119 to the greenback, or 82.52 U.S. cents, up 0.3 percent. The currency, which was outperforming major currency counterparts, traded in a range of C$1.2098 to C$1.2170. On Friday, it touched its strongest since May 2015 at C$1.2063. Prices of oil, one of Canada's major exports, also moved higher, settling up 59 cents, or 1.24 percent at $48.07 a barrel.
U.S. crude oil prices , which declined more than 3
percent on Friday, seesawed during the session, with Hurricane Irma raising demand fears, while U.S. refinery restarts and Saudi talks to extend a production cut deal provided support.
Speculators have increased bullish bets on the loonie, data from the U.S. Commodity Futures Trading Commission and Reuters calculations showed on Friday. Canadian dollar net long positions edged up to 53,644 contracts as of Sept. 5 from 53,167 a week earlier.
The U.S. dollar gained ground as renewed interest in
riskier assets prompted some investors to cut short bets against the greenback before U.S. inflation data this week. Canadian government bond prices were lower across the yield curve as demand faded for safe-haven government bonds.
The 10-year declined 35 Canadian cents to yield
2.025 percent. The yield reached its highest intraday since July 31 at 2.042 percent. Canadian housing starts rose unexpectedly in August, data from the Canada Mortgage and Housing Corporation showed.
(Reporting by Solarina Ho; Additional reporting by Fergal Smith; Editing by Meredith Mazzilli and Jonathan Oatis)