June 18 (Bloomberg) -- Canada’s dollar was little changed as gains in crude oil and stocks offset pressure from a U.S. dollar that was strengthened by speculation it will be made more attractive by changes to the way the London interbank offered rate is set.

Canada’s currency, known as the loonie, traded at C$1.1324 per U.S. dollar at 4:42 p.m. in Toronto, from C$1.1318 yesterday. It earlier climbed as much as 0.7 percent, then depreciated 0.4 percent. One Canadian dollar purchases 88.31 U.S. cents.

“Oil and equities are still the main pushers for the Canadian dollar,” said Michael Leavitt, a Montreal-based institutional-derivatives broker at MF Global Canada Co.

The British Bankers’ Association said it may allow more institutions to take part in the daily survey that sets Libor, the rate banks say they charge each other for loans in dollars, and the benchmark for more than $360 trillion of financial products around the world. The U.S. currency also gained today as investors abandoned bets the euro would rise further after failing to appreciate to a key level.

“It looks like the euro failed to extend higher to $1.40, so we’re seeing a liquidation,” said Jonathan Gencher, Toronto- based director of currency sales at BMO Capital Markets, a unit of Canada’s fourth-largest bank. The Canadian dollar is moving on “U.S. dollar strength,” he said.

Bank of Canada Governor Mark Carney, in a speech in Regina, Saskatchewan, said the nation’s households face rising “stresses” that could lead to losses for banks. He reiterated a pledge to keep interest rates unchanged for a year and repeated comments from a speech last week that the global economy will not rebound quickly from recession.

Inflation Data

Carney also said the bank still has “considerable” flexibility to use other measures to boost the economy. The central bank, which implements policy to keep inflation at 2 percent, has said it is prepared to inject new money into the economy by purchasing assets if needed. Inflation data today eased pressure on the bank to take such steps, boosting the currency earlier in the session.

Canada’s annual consumer price index increased 0.1 percent in May from a year earlier, Statistics Canada said in Ottawa. The median forecast of 21 economists in a Bloomberg News survey was for negative 0.2 percent.

“Core inflation is back to the middle of the Bank of Canada’s range; the threat of quantitative easing thus likely lessens,” said David Watt, senior currency strategist in Toronto at RBC Capital Markets, a unit of Canada’s biggest bank. “Hence Bank of Canada discomfort with Canadian dollar strength likely lessens a snick.”

U.S. Stocks

U.S. stocks rose, with the Standard & Poor’s 500 Index gaining 0.8 percent, as a report by the Federal Reserve Bank of Philadelphia showed manufacturing in the Philadelphia region contracted in June at the slowest pace in nine months. The Conference Board’s index of U.S. leading economic indicators rose more than forecast in May for the second straight month, and a Labor Department report showed the number of Americans getting jobless benefits fell for the first time since January.

The yield on the 10-year Canadian government note rose eight basis points, or 0.08 percentage point, to 3.52 percent. The price of the 3.75 percent security maturing in June 2019 fell 66 cents to C$101.95. Canada’s government bonds lost investors 2.6 percent this year, according to a Merrill Lynch & Co. index.

The loonie will strengthen to C$1.10 by the second quarter of 2010, according to the median estimate of 38 economists and analysts in a Bloomberg survey.

To contact the reporter on this story: Chris Fournier in Montreal at cfournier3@bloomberg.net

Last Updated: June 18, 2009 16:46 EDT