* Canadian dollar gains more than 1 U.S. cent
* Rises as high as C$1.0406/US$, or 96.10 U.S. cents
* Higher oil, metal prices boost currency
* Bonds mostly higher (Adds details)
By Ka Yan Ng
TORONTO, Dec 1 (Reuters) - The Canadian dollar reached a six-week high against the U.S. currency on Tuesday as the price of key commodities rose and investor thirst for risk climbed along with global equities as worries over Dubai's debt waned.
Jitters about Dubai's debt subsided after state conglomerate Dubai World, the center of the debt storm, said its planned restructuring of some units involved a lower than expected $26 billion in debt.
"Given that it's considerably lower than what the market was expecting, we saw a nice rebound in terms of risk-seeking behavior," said George Davis, chief technical analyst at RBC Capital Markets.
"With the (U.S.) dollar generally trading to the weaker side of the ledger against all the major currencies, except the yen, we've seen some continued downside follow-through down towards the C$1.04 area," said Davis.
The currency rose as high as C$1.0406 to the U.S. dollar, or 96.10 U.S. cents, its highest level since Oct. 21, as global stocks were sharply higher, and gold hit a record above $1,200 an ounce. The price of oil, a key Canadian export, was also holding above $78 a barrel. [MKTS/GLOB] [GOL/] [O/R]
An interest rate hike in Australia also sharpened risk appetite. [ID:nSYD393465]
At 12:20 p.m. (1720 GMT), the Canadian dollar was at C$1.0435 to the U.S. dollar, or 95.83 U.S cents, up from C$1.0556 to the U.S. dollar, or 94.73 U.S. cents, on Monday.
The move higher on Tuesday extends gains made in the previous session after numbers showed Canada officially exited recession. [ID:nN30349047]
Although the currency is on a run higher, Canada is unlikely to have to take special measures to curb the rise, such as those taken on the yen by Japan, Finance Minister Jim Flaherty said on Tuesday. [ID:N01499613]
The Bank of Japan announced more measures to ease monetary policy to help the ailing economy following an emergency meeting, while holding interest rates at 0.1 percent. [ID:nTKZ006325]
BONDS TURN HIGHER
Canadian bond prices were higher across most of the curve, reversing early losses, as the U.S. manufacturing sector grew for the fourth straight month in November, but at at a slower pace.
Data from the Institute for Supply Management reinforced questions about the strength of the U.S. recovery, although gains in U.S. stocks and signs of a stabilizing housing market limited gains in debt markets. [ID:nN01398224]
The two-year government bond