CANADA FX DEBT-C$ slips as Europe worries grip markets
* Currency lower at 97.04 U.S. cents * C$ touches lowest since June 12 * Bonds climb as investors shun risk By Jennifer Kwan TORONTO, June 25 (Reuters) - The Canadian dollar slipped against its U.S. counterpart on Monday as equity markets faltered on investor worries that policymakers at a European summit this week would make little progress in solving the region's debt crisis. The euro weakened, equities hit a one-week low and Spanish borrowing costs climbed ahead of the June 28-29 summit. Investors are worried policymakers will not do enough to prevent Spain and Italy from being sucked further into a debt crisis that has already forced Greece, Portugal and Ireland to seek international bailouts. "The markets are starting the week on a sour note all relating to Europe," said Blake Jespersen, a managing director foreign exchange sales at BMO Capital Markets. At around 9:05 a.m. (1305 GMT), the Canadian currency was at C$1.0305 to the greenback, or 97.04 U.S. cents. Earlier, it touched C$1.0310, its weakest against the greenback since June 12. The currency finished its North American session on Friday at C$1.0246 to the greenback, or 97.60 U.S. cents. Investors were also cautious as Spain formally requested euro zone rescue loans on Monday to recapitalise banks that are laden with bad debts. Analysts say the euro zone's fourth largest economy, which has become the focus of the debt crisis, will struggle to get out of recession unless the banking problems are solved. The Canadian currency largely underperformed most of its major currency peers including the New Zealand and Australian dollars. Jespersen said Canada's dollar would likely trade a range of C$1.0250-C$1.04 in the near term. "There's no real Canadian data on the calendar until Friday so the Canadian dollar is going to take its cues from what's going on in Europe and the overall theme in the market. So expect that to be quite negative this week," he said. Markets will await domestic growth data for April, as well as industrial product and raw materials price data. Canadian bonds mirrored moves in U.S. Treasuries, which were higher in Europe on uncertainty about the EU summit later in the week. The two-year Canadian government bond rose 10 Canadian cents to yield 1.018 percent, while the benchmark 10-year bond was up 83 Canadian cents to yield 1.721 percent.
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