The Canadian dollar closed slightly higher Thursday amid a rate hike by the European Central Bank and a move by oil prices above $110 (U.S.) a barrel.

The loonie was off early highs, closing up 0.21 of a cent at $1.0433 (U.S.). The currency had earlier run as high as $104.49, its highest level since November, 2007.

The European Central Bank raised its key interest rate by a quarter point to deal with inflation even as several euro zone countries struggle with ailing economies and a debt crisis.

The refinancing rate was lifted to 1.25 per cent from a record low of one per cent, where it had been since May, 2009, only a day after Portugal asked for an international bailout.

"Core inflation has stabilized and the pressure on ... headline inflation," said Scotia Capital chief currency strategist Camilla Sutton.

"However, unlike the Fed, the ECB focuses on headline and its aim is to maintain it at or below two per cent. Accordingly, with the latest flash estimate having come in at 2.6 per cent year over year, the ECB is concerned. In addition, the spread between CPI and the ECB policy rate has never been higher."

The Bank of England said Thursday it was keeping its key rate unchanged.

The Bank of Canada makes its next scheduled announcement on interest rates Tuesday. The central bank is widely expected to leave rates unchanged until later in the year.

Meanwhile, traders were also looking ahead to a solid Canadian employment report at the end of the week. Statistics Canada is expected to report Friday that the economy added about 30,000 jobs in March and that data could further strengthen the currency.

Oil prices headed up with the May crude contract on the New York Mercantile Exchange ahead $1.47 at $110.30 a barrel.

Crude has traded around $109 this week as traders mull the impact of Libya's civil conflict, a weakening U.S. dollar and China's fourth interest rate hike since October. Prices have surged 29 per cent since mid-February.

The May copper contract gained 5 cents to $4.42 a pound after jumping 10 cents Wednesday.

Bullion prices also ticked higher with the June gold contract on the Nymex up 80 cents to $1,459.30 an ounce.