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Dollar rises as Irish debt worries ease Add to ...

Canada's loonie advanced against the U.S. dollar as the greenback lost ground against other currencies Thursday.

The Canadian dollar closed up 0.27 of a cent at 97.9 cents (U.S.).

The U.S. dollar weakened amid signs that Ireland will take a loan from the European Union and the International Monetary fund to restore confidence on financial markets.

"Traders are viewing the talks between the EU, [European Central Bank] IMF and Ireland as a bullish indicator," said Jonathan Sudaria, a dealer at London Capital Group.

"Traders are betting on the fact that European officials will try and get the Irish issue resolved swiftly to avoid any repeat of the Greek crisis earlier this year."

Sentiment on financial markets improved after the governor of the Central Bank of Ireland said Thursday he expects his country to accept a loan worth tens of billions of dollars as it struggles to bail out five Irish banks to the tune of at least $62-billion (U.S.).

Patrick Honohan expects the loan - if approved by the Irish government - to provide a financial "buffer" for Irish banks that would not be used. He compared it to similar U.S. moves in 2008 to inject banks with cash that reassured investors and was eventually repaid.

Markets have been roiled in recent days by fears that Ireland would become the latest European country to face a possible default, following Greece's near collapse in May.

The Canadian dollar also advanced amid a rebound in commodity prices. Prices had weakened considerably over the past week as the U.S. dollar strengthened as the Irish debt crisis grew more serious.

Investors were also worried about lower demand from China as the country looked likely to make further moves to slow the economy after October inflation came in at a 25-month high.

There have been worries that the Chinese government would make economy-slowing interest rate hikes to deal with higher prices.

But buyers felt more optimistic after China said it would impose price controls if needed on basic food items, boost vegetable production, give food subsidies to poor families and release stockpiles of grain, cooking oil and sugar to deal with higher inflation.

The December crude oil contract rose $1.41 to $81.85 a barrel following a drop of about 8 per cent in the last week.

The December copper contract on the Nymex rose 10 cents to $3.83, still down sharply from a recent high of $4.04 on Nov. 9.

The December bullion contract in New York gained $16.10 to $1,353 an ounce.

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