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* Canadian dollar at C$1.0266 vs US$, or 97.41 U.S. cents * Central bank holds rates, trims growth forecasts * C$ weakest since March 13 after central bank news By Alastair Sharp TORONTO, April 17 (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Wednesday after the Bank of Canada chopped its growth forecasts, although losses were likely restricted by the bank holding to its view that interest rates would need to rise at some point. The loonie, as the currency is colloquially known, stuck to a weakening trajectory after the central bank statement, at one point hitting its weakest level in more than four weeks, but movement was relatively subdued. It would likely have pushed through C$1.03 if the central bank had dropped its eventual tightening bias, one analyst said. "From a trading perspective dollar/CAD buyers were hoping for hints of a more neutral stance, when that didn't come they chose to lighten up their positions," said Adam Button, a currency analyst at ForexLive in Montreal, who also noted strong corporate buying interest as it approached that level. The Canadian dollar ended the session changing hands at C$1.0266 to the greenback, or 97.41 U.S. cents, compared with C$1.0205, or 97.99 U.S. cents, at Tuesday's North American close. The central bank said Canada would likely notch economic growth of 1.5 percent this year, down from its 2 percent forecast in January, and said slack in the economy was continuing to grow. It blamed slower growth in government spending and business investment for the lowered forecast, as well as a sharper contraction in housing activity than it had predicted. The report, in which the central bank also stuck to its oft-repeated view that its next interest rate move would be a rise, helped solidify the loonie's position in the high C$1.02s against the U.S. dollar. After a brief bump stronger right after the report was released, the currency "faded off, likely because of the outlook for growth and the headwinds facing the domestic economy," said Camilla Sutton, chief currency strategist at Scotiabank. At one point it hit C$1.0295, its weakest point since March 13. It might have weakened further if the bank had removed its tightening bias altogether, as some economists had predicted it would. "That hawkish tinge helped the loonie weather so far the bank's forecast for growth to slow," Joe Manimbo, a senior market analyst at Western Union Business Solutions, wrote in a note. Canada, which recovered quicker from the global financial crisis than most developed economies, has eschewed the unconventional monetary easing proving so popular at the U.S. Federal Reserve, the Bank of England, and now in drastic fashion at the Bank of Japan. The Bank of Canada is "following a very similar script to the last statement and there really hasn't been much in the way of any significant change," said Darcy Briggs, a fixed-income portfolio manager with the Bissett unit of Franklin Templeton Investments. "We haven't seen too much in the way of any significant market reaction out of that." The price of Canadian government debt rose across the curve, with the two-year bond up 1 Canadian cent to yield 0.933 percent, while the benchmark 10-year bond rose 23 Canadian cents to yield 1.712 percent. Yields on overnight index swaps, which trade based on expectations for the policy rate, showed traders slightly scaled back their bets of a rate cut later this year.