(Adds strategist quotes and details throughout; updates prices)
* Canadian dollar rises 0.6% against the greenback
* BoC holds its key interest rate steady at 0.25%
* U.S. oil settles 3.5% higher
* Canada's 10-year yield rises 2.7 basis points to 0.593%
By Fergal Smith
TORONTO, Sept 9 (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Wednesday as oil and stock prices rallied and the Bank of Canada stopped short of additional stimulus measures, with the loonie rebounding from a three-week low.
The Canadian dollar CAD= was trading 0.6% higher at 1.3153 to the greenback, or 76.03 U.S. cents. The currency hit its weakest intraday level since Aug. 17 at 1.3259.
Wall Street's main indexes rallied to stanch the bleeding after a three-day drop as investors jumped back in to take advantage of the repricing in technology-related stocks, while U.S. crude oil CLc1 settled 3.5% higher at $38.05 a barrel.
Oil, one of Canada's major exports, clawed back some of the losses it sustained in the previous session.
"The main drivers of Canadian dollar strength today are the large bounces in equity markets and oil," said Adam Button, chief currency analyst at ForexLive.
A lack of new policy initiatives from Canada's central bank was also supportive of the loonie, contrasting with the recent shift by the Federal Reserve to average inflation targeting, Button said. "The market is sensing that the Bank of Canada has reached its limit on easing."
The BoC held its key interest rate steady at 0.25% but left the door open on possible future changes to its bond-buying program. It said that the third-quarter rebound was looking to be faster than anticipated but the economy will continue to require extraordinary support as it moves to a recuperation phase. housing starts rose 6.9% in August to notch a 13-year high. the low-hanging fruit has basically been harvested and now it's virus dependent and a slow grind," said Darcy Briggs, a portfolio manager at Franklin Templeton Canada.
Canada's 10-year yield CA10YT=RR rose 2.7 basis points to 0.593% along with higher U.S. Treasury yields.