02/12/2015 08:34 EST | Updated 04/14/2015 05:59 EDT

Canadian dollar rises on higher oil prices, optimism for Ukraine ceasefire

TORONTO - The Canadian dollar closed sharply higher Thursday amid general weakness in the American greenback following a ceasefire agreement in eastern Ukraine.

The loonie jumped 0.95 of a cent to 80.06 cents US as the weaker American dollar also boosted commodity prices.

March crude gained $2.37 to US$51.21 a barrel after falling $4 over the previous two sessions amid the latest sign of rising inventories in the United States.

Crude prices have plunged 50 per cent since the highs of last summer as markets work through a huge supply/demand imbalance. The fall in crude has also weighted heavily on the Canadian dollar, which is down about 6.5 cents just since the start of the year.

The loonie has also been pressured by a half-point rate cut by the Bank of Canada in January and increasing speculation that the bank will again cut rates in March.

Elsewhere on commodity markets, March copper rose six cents to US$2.60 a pound while April gold gained $1.10 to US$1,220.70 an ounce.

Financial markets were also lifted by news that negotiations between Russia, Ukraine, France and Germany had produced a preliminary peace deal for Ukraine. A ceasefire is to go into effect in eastern Ukraine on Sunday.

The conflict has weighed on the economies of Europe and Russia by creating uncertainty and through the impact of sanctions that the two sides have traded.

The Greek debt crisis also vied for investor attention after the country's talks with eurozone creditors on overhauling its bailout loans broke down.

Still, markets were optimistic a deal will be reached in time for Greece to avoid a potential exit from the euro.