(Adds Bank of Canada, broker comment, updates prices to close)
* Canadian dollar settles at C$1.3383, or 74.72 U.S. cents
* Bond prices lower across yield curve
By Alastair Sharp
TORONTO, March 28 (Reuters) - The Canadian dollar hung in with a broadly stronger U.S. dollar on Tuesday, helped by rising prices for oil, a major Canadian export, as the Bank of Canada stuck to its cautious tone.
Canada's economy has a lot more room to grow, with higher unemployment and more excess capacity than the United States, and if interest rates were raised today Canada would tip into recession, Bank of Canada Governor Stephen Poloz said.
Poloz defended the bank's dovish outlook - which contrasts with the U.S. Federal Reserve's hike earlier this month and plan for more - in the face of recent stronger-than-expected growth in jobs, gross domestic product and retail sales. is due to report GDP data for January on Friday.
The Canadian dollar CAD=D4 settled at C$1.3383 to the greenback, or 74.72 U.S. cents, slightly weaker than Monday's close of C$1.3376, or 74.76 U.S. cents.
"You might call that a victory, when the U.S. dollar is gaining relative to some of the other majors, the fact that we held in sub-C$1.34 is probably considered a good thing," said Don Mikolich, executive director for foreign exchange sales at CIBC Capital Markets.
The currency's strongest level of the session was C$1.3355, while it touched its weakest since March 15 at C$1.3415.
The U.S. dollar .DXY rose off 4-month lows against a basket of major currencies as a top Federal Reserve official reinforced expectations of more U.S. rate hikes to come while political uncertainties surrounding Britain's exit from the EU pressured European currencies.
Oil prices rose as much as 2 percent after a severe disruption to Libyan oil supplies and as officials suggested OPEC and other producing countries could extend an output cuts deal to the end of the year. O/R
Canadian government bond prices fell across the yield curve, with the two-year CA2YT=RR down 2 Canadian cents to yield 0.741 percent, after earlier falling to its lowest yield since Feb. 8, while the 10-year CA10YT=RR price fell 18 Canadian cents to yield 1.627 percent.
The spread between Canadian and U.S. 10-year yields matched its widest since March 2.