By Chris Fournier Feb. 16 (Bloomberg) -- Canada’s dollar increased to the highest level in February as crude oil advanced and Greece said it hasn’t requested a bailout from the European Union, renewing demand for currencies tied to economic growth. The loonie, as the currency is known for the image of the aquatic bird on the C$1 coin, got a boost as a government report showed factory sales rose in December to the highest level in a year. It gained versus the yen as Canada announced tighter regulation of the mortgage industry. The yield on the 10-year government bond earlier reached a one-month high. “Risk is back on,” said Firas Askari, head currency trader in Toronto at Bank of Montreal, Canada’s fourth-largest lender. “This is based on the belief that Europe must aid Greece, not actual fact.” The Canadian currency appreciated as much as 0.8 percent to C$1.0410 per U.S. dollar, the strongest since Jan. 20, before trading at C$1.0441 at 4:11 p.m. in Toronto, compared with C$1.0493 yesterday. One Canadian dollar buys 95.78 U.S. cents. The loonie climbed 0.6 percent to 86.30 yen, from 85.79. “Higher global commodity and equity prices have placed further downward pressure” on the U.S. dollar versus the loonie, Shane Enright, a currency strategist in Toronto at Canadian Imperial Bank of Commerce, the nation’s fifth-largest lender, wrote in a note to clients. “Solid previous congestion at the C$1.0410 level should provide the next point of technical support,” he wrote. Support refers to the lower boundary of a trading range where buy orders may be clustered. Crude Oil Rallies Crude oil, Canada’s largest export, increased 4.1 percent to $77.14 a barrel. The Standard & Poor’s 500 Index advanced 1.8 percent. The S&P/TSX Composite Index rose 1 percent. European Union finance ministers meeting today in Brussels agreed that Greece must work harder to reduce the EU’s biggest budget deficit and help restore investor confidence, German Deputy Finance Minister Joerg Asmussen said. Greece is ahead of its own deficit-reduction targets and won’t need EU assistance, Finance Minister George Papaconstantinou said after the finance ministers met. The loonie declined 0.7 percent to C$1.4376 per euro as the 16-nation currency rallied against most of its major counterparts and ended a four-day slump versus the greenback. Canadian government bonds increased, pushing the yield on the 3.75 percent security due in June 2019 down 2 basis points, or 0.02 percentage point, to 3.45 percent. The price of the 10- year bond rose 12 cents to C$102.40. The yield earlier climbed to 3.52 percent, the highest level since Jan. 15. Bond Auction The Bank of Canada will auction tomorrow C$1.5 billion ($1.4 billion) of 4 percent bonds maturing in June 2041. The previous auction of 30-year bonds on Oct. 15 fetched an average yield of 4.016 percent, with a bid-to-cover ratio of 2.352, according to data on the central bank’s Web site. The loonie also climbed as Jim Flaherty, the nation’s finance minister, said today he will tighten mortgage industry rules to “moderate” the housing market and ensure homebuyers can afford their purchases when interest rates rise. “Housing was a potential weakness, and people saw they’re taking control of it,” said Brian Kim, a currency strategist at UBS AG in Stamford, Connecticut. “We still like Canada versus the euro.” Under the changes for government-backed mortgages, which take effect April 19, buyers will have to meet standards for five-year, fixed-rate mortgages even if they opt for variable rates. Limits on refinancing will be stricter, and people buying a home they don’t occupy must make a down payment of 20 percent. Canada’s dollar will strengthen to C$1.04 by the end of the third quarter, according to the median forecast of economists and analysts in a Bloomberg News survey. To contact the reporter on this story: Chris Fournier in Montreal at cfournier3@bloomberg.net

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