Canada confirms it suffered a "serious" cyber attack

A cyber-attack on two Canadian economic ministries, while serious, won't affect the timing of next month's federal budget, a top cabinet minister said on Thursday.

The Canadian Broadcasting Corp said hackers using China-based servers last month had broken into computer systems at the Finance Department and Treasury Board. The Finance Department is preparing the federal budget.

"I wouldn't say it's the most aggressive (attack) but it was a significant one, significant that they were going after financial records. ... We were able to shut things down and protect information," Treasury Board Minister Stockwell Day told reporters.

"It slows down your internal operations for a while because we had to immediately shut down certain parts of the network ... but those are all in the process of being reopened. The budget's on track and it's going to be a good budget."

CBC said the hackers had also gained access to an agency that advises the armed forces on science and technology.

David Skillicorn, a professor of computing at Queen's University in Kingston, Ontario, said one target might have been data about Canada's booming commodities industry.

"If we guess it was the Chinese with some economic motivation, then presumably they're interested in some decision the government might be making on taxes or budgets that will impact contracting with some Canadian mining company, or something like that," he told Reuters.

"There are lots of things the Chinese are interested in but that certainly -- in the Canadian context -- jumps out as the big one at the moment."

Canada's spy service complains regularly about what it says is industrial espionage by China and other states.

In Beijing, a Chinese Foreign Ministry spokesman denied there was a Chinese link to the hacking.

The Bank of Canada said it had found no evidence that it had been compromised.

Canada's parliamentary watchdog, Auditor-General Sheila Fraser, has warned for years that the government's cyber protection is not good enough.

"The best you can do is improve your layers of protection and the trouble is whenever this issue comes up, convenience trumps security every time. So people want to be able to work from their BlackBerry's and work from home and they put holes in their systems," said Skillicorn.

Canada's minority Conservative government has markedly toned down its criticism of China's human rights record while trying to increase bilateral trade.

Last year, Canadian researchers said a cyber-espionage group in southwestern China had stolen documents from the Indian Defence Ministry and e-mails from the Dalai Lama's office.

The year before, the same researchers described a systematic cyber-infiltration of the Tibetan government-in-exile, which they dubbed GhostNet.

(Reporting by David Ljunggren).