(Adds strategist comment, updates prices to close)
* Canadian dollar ends at C$1.2975, or 77.07 U.S. cents
* Bond prices lower across maturity curve
By Alastair Sharp
TORONTO, June 29 (Reuters) - The risk-sensitive Canadian
dollar gained against its U.S. counterpart on Wednesday as
global financial markets stabilized for a second straight day
following volatility triggered by Britain's vote to leave the
European Union.
Stock markets and oil prices built on a recovery from the
aftermath of last week's Brexit vote as investors wagered
central banks would ultimately ride to the rescue with more
stimulus.
"We've moved from a kind of acute fear coming out of the
vote to one where we have a pretty extended timeline" for an
actual withdrawal, said Eric Theoret, a currency strategist at
Bank of Nova Scotia.
The Canadian dollar CAD=D4 settled at C$1.2975 to the
greenback, or 77.07 U.S. cents, stronger than Tuesday's close of
C$1.3035, or 76.72 U.S. cents.
The currency's strongest level of the session was C$1.2942,
while its weakest was C$1.3042.
It underperformed against the Australian and New Zealand
dollars and the British pound, which had sunk after the vote.
Oil rose as traders moved money back into markets hit by the
initial shock of Brexit, while a potential oil workers' strike
in Norway and a crisis in Venezuela's oil sector also provided
support. O/R
Expectations for the next Bank of Canada interest rate hike
have been pushed back to the first quarter of 2018, according to
a Reuters poll of primary dealers, who expect Britain's vote to
leave the European Union to weigh on Canada's economy.
Overnight index swaps implied a one-in-five chance of a rate
cut this year by the central bank after pricing in no change in
policy before Brexit. BOCWATCH
Canadian government bond prices were lower across the
maturity curve, with the two-year CA2YT=RR price down 9
Canadian cents to yield 0.550 percent and the benchmark 10-year
CA10YT=RR slid 47 Canadian cents to yield 1.131 percent.
Canadian gross domestic product data for April is due on
Thursday. Economic growth is expected to have edged up 0.1
percent following two months of declines. ECONCA