The Canadian dollar rose against its US counterpart and had a weekly advance as optimism increased that action by European leaders will ease the region\'s debt crisis, buoying risk assets. The loonie, as the currency is also known, was supported after the Italian Senate approved debt-reduction measures, paving the way for a new government, and as Greece\'s Lucas Papademos was sworn in as prime minister. The Canadian currency erased losses Friday after a report showed US consumer confidence rose in November more than projected and oil climbed. \"We have tensions in the market easing, and that\'s helped oil prices and the commodity currencies in general,\" said Kathy Lien, director of currency research at the online trading firm GFT Forex in New York. \"A leadership change in Italy means that the prospect for more volatility and more slides in equities has declined, and for risky assets, that\'s good.\" Canada\'s currency appreciated 0.6 per cent to C$1.0104 per US dollar on Friday in Toronto, extending its weekly rally to 0.8 per cent. One Canadian dollar buys 98.97 US cents. The Thomson Reuters/University of Michigan preliminary index of US consumer sentiment climbed to 64.2 this month, the highest level since June, from 60.9 in October. The median estimate of 67 economists in a Bloomberg News survey was for a reading of 61.5. The US is Canada\'s biggest trading partner. Implied volatility for the currencies of the Group of Seven nations touched 13.68 on Friday, the highest level since October 6, according to a JPMorgan Chase & Co index. It was 12.99 yesterday. Implied volatility, which traders quote and use to set option prices, signals the expected pace of swings in the underlying currency. The Standard & Poor\'s/TSX Composite Index rose 1.4 per cent, and the S&P 500 Index added 2 per cent. Futures on crude oil, Canada\'s largest export, increased 1.7 per cent to $99.22 a barrel in New York trading. Canada\'s bond market was closed yesterday in observance of Remembrance Day. Italy\'s Senate approved debt-reduction measures to shore up investor confidence and pave the way for a new government that may be led by former European Union Competition Commissioner Mario Monti. The timing of the ballot was moved forward after Prime Minister Silvio Berlusconi\'s parliamentary majority unravelled last week, leading bond yields to surge to euro-era records. The yield on the nation\'s benchmark 10-year bond rose above 7 per cent this week, increasing concern Italy will follow Greece, Portugal and Ireland in seeking financial assistance from the European Union and the International Monetary Fund. Greek President Karolos Papoulias gave Papademos the mandate to form a government after agreement from Prime Minister George Papandreou and opposition party leaders. \"We\'ve still got a ways to go,\" said Shaun Osborne, chief currency strategist at Toronto-Dominion Bank. \"The outlook for the euro is still that it\'s probably headed toward more weakness. In that environment, we would expect the Canadian dollar to struggle somewhat.\"