CANADA FX DEBT-C$ strengthens, maintains gains after fiscal stimulus revealed
* Canadian dollar ended at C$1.3035, or 76.72 U.S. cents * Bond prices lower across the maturity curve By Fergal Smith TORONTO, March 22 (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Tuesday, maintaining gains after the federal budget revealed expected stimulus, while earlier losses after deadly blasts in Brussels were reversed. The new Liberal government said that in a bid to revive growth it would run a C$29.4 billion deficit for fiscal 2016-17, slightly larger than a C$28.6 billion shortfall that analysts had expected. "The government has done a fairly good job of telegraphing the details of this budget," said Jack Spitz, managing director of foreign exchange at National Bank Financial. "So the market reaction has been fairly muted." "If it creates economic growth and jobs and it keeps the Bank of Canada from potentially cutting again I guess it's ultimately a good thing for the currency," he added. The Bank of Canada has said it will incorporate the fiscal measures into its April projection. Bond issuance will jump 45 percent to C$133 billion in the coming fiscal year to accommodate the deficit, led by increased sale of short- and medium-term bonds. Earlier in the session, the explosions in the Belgian capital had pushed investors toward the safe haven assets. However, losses on Wall Street were pared and crude oil was down only slightly after an earlier tumble. U.S. crude prices settled at $41.45 a barrel, down 0.17 percent. The Canadian dollar ended at C$1.3035 to the greenback, or 76.72 U.S. cents, stronger than Monday's close of C$1.3085, or 76.42 U.S. cents. The currency's strongest level of the session was C$1.3028, while its weakest level was C$1.3138. Canadian government bond prices were lower across the maturity curve, with the two-year price down 5.5 Canadian cents to yield 0.588 percent and the benchmark 10-year falling 26 Canadian cents to yield 1.331 percent. The spread between 10-year and 30-year yields narrowed 2.4 basis points to 76.9 basis points, as the longer dated maturity outperformed. It was partly due to relief that the government did not target more long-term bond issuance, according to Andrew Kelvin, senior rates strategist at TD Securities. (Additional reporting by Alastair Sharp; Editing by Chris Reese)
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