CANADA FX DEBT-C$ firms after Spanish deal lifts sentiment
* C$ firmer at C$1.0177 vs US$, or 98.26 U.S. cents * Bond prices slip across the curve By Claire Sibonney TORONTO, July 10 (Reuters) - The Canadian dollar edged up against its U.S. counterpart on Tuesday after euro zone ministers agreed on the outline of an aid package for Spain, which helped offset investor concern over signs of a sharp economic slowdown in China and its potential impact on the global economy. Euro area finance chiefs reached a deal to grant Madrid an extra year until 2014 to reach its deficit reduction targets in exchange for further budget savings. They also ratified the bailout for Spanish banks. The decisions were aimed at preventing the currency area's fourth largest economy, mired in a worsening recession, from needing a full state bailout which would stretch the limits of Europe's rescue fund and plunge it deeper into a debt crisis. "The Canadian dollar is doing a little bit better here this morning, just on the back of a general uptick in risk appetite across the markets," said Matt Perrier, director of foreign exchange sales at BMO Capital Markets. "European peripheral spreads have pulled back and equities are rallying a little bit ... it feels like the risk aversion in the last few days was getting a little bit tired." At 7:42 a.m. (1142 GMT), the Canadian currency was at C$1.0177 against the greenback, or 98.26 U.S. cents, slightly stronger than Monday's North American session close at C$1.0193 to the U.S. dollar, or 98.11 U.S. cents. Perrier said there was good selling interest for the U.S. dollar against Canada's above C$1.02 and bids back down towards C$1.0100. Still, investors remained skeptical about riskier assets on doubts the European crisis can stabilize. Data from China also added pressure after a report showed imports in June rose at only half the pace expected, signal ling a need for Beijing to do more to bolster growth. Canadian bond prices drifted lower across the curve. The two-year government bond was down 3 Canadian cents to yield 0.973 percent, while the benchmark 10-year bond was off 6 Canadian cents to yield 1.668 percent.
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