CANADA FX DEBT-C$ slightly weaker as European fears weigh

Fri May 25, 2012 9:21am EDT
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* C$ weaker at C$1.0285 vs US$, or 97.23 U.S cents
    * Trade seen quiet ahead of U.S. holiday weekend
    * Canadian gov't 10-, 30-yr bond yields at record low

    By Andrea Hopkins	
    TORONTO, May 25 (Reuters) - Canada's dollar was slightly
weaker against its U.S. counterpart in early trade on Friday, as
investors continued to worry about the risk of Greece leaving
the euro zone, though trading quieted ahead of a U.S. three-day
holiday weekend.	
    U.S. stocks looked set to open little changed and the euro
inched up from two-year lows, as wary investors looked for
bargains after recent sharp losses and a smattering of positive
economic data tempered earlier grim indicators. 	
    Analysts said the anticipation of the U.S. Memorial Day
holiday on Monday and the absence of major news or events in
Europe means trade will likely be subdued, keeping the Canadian
dollar in a tight range near four-month lows.	
    "It's pretty dull, to be honest, given that we've got very
little in the way of news scheduled. Markets are all pretty flat
and it is the U.S. three-day weekend -- that tends to suppress
appetite for taking risk," said Adam Cole, global head of FX
strategy at RBC Capital Markets in London.	
    The Canadian dollar was slightly weaker at C$1.0285
versus the U.S. dollar, or 97.23 U.S. cents, down from
Thursday's close at C$1.0271 versus the U.S. dollar, or 97.36
U.S. cents.	
    Cole said the currency would likely trade between C$1.0226
and the session low of C$1.0296 hit on Wednesday and Thursday, a
four-month nadir.	
    "In the absence of a major decline in risk appetite, I would
say that is very unlikely (to weaken past that)," Cole said. 	
    The currency has suffered alongside the euro, global stocks
and other assets considered riskier on market uneasiness over
Greece's possible exit from the euro zone.	
    German consumer morale held steady going into June while
Chinese exports showed signs of recovery in early May,
countering dire recent data that suggested Europe's growth
engine was no longer immune from the region's debt crisis and
factory output in the world's number two economy was faltering.
    The modest data boost helped the euro rise 0.3 percent to
$1.2583, inching up from two-year lows of 1.25155 as
bearish investors took a breather from a sharp sell-off. But the
common currency stayed on track for its fourth straight week of
    The uncertainty in Europe has hurt the Canadian dollar
because investors have fled to the safety of the U.S. dollar and
government debt.	
    Canadian government bond prices climbed across the curve
with the two-year bond up 10 Canadian cents to yield
1.092 percent, while the benchmark 10-year bond 
climbed 45 Canadian cents.	
    The safe-haven buying drove longer-term Canadian bond yields
to record lows. The 10-year yield sank as far as 1.796, while
the 30-year bond yield hit an all-time low of 2.336