CANADA FX DEBT-C$ strengthens to nearly 10-month high against greenback
* Canadian dollar at C$1.2573, or 79.54 U.S. cents * Bond prices lower across the maturity curve TORONTO, April 28 (Reuters) - The Canadian dollar strengthened to a nearly 10-month high against its U.S. counterpart on Thursday after unexpected monetary-policy inaction from the Bank of Japan and weaker-than-expected U.S. economic growth weighed on the greenback. The U.S. dollar weakened against a basket of currencies after a lack of fresh stimulus from the Bank of Japan sent the yen soaring and world equity markets into the red. On Wednesday, the U.S. Federal Reserve signaled it, too, was hitting the policy pause button. U.S. economic growth braked sharply to its slowest pace in two years as consumer spending softened and a strong dollar continued to undercut exports. The loonie has rallied more than 16 percent from a 12-year low in January of C$1.4689, helped by better-than-expected domestic economic activity, fiscal stimulus and rebounding oil prices. Oil prices edged higher on Thursday, holding near their strongest levels for 2016. U.S. crude prices were up 0.22 percent at $45.43 a barrel. At 9:43 a.m. ET (1343 GMT), the Canadian dollar was at C$1.2573 to the greenback, or 79.54 U.S. cents, stronger than Wednesday's close of C$1.2619, or 79.25 U.S. cents. The currency's weakest level was C$1.2606, while it touched its strongest since July 1 last year at C$1.2529. Canadian government bond prices were lower across the maturity curve, with the two-year price down 1.5 Canadian cents to yield 0.687 percent and the benchmark 10-year falling 18 Canadian cents to yield 1.519 percent. The Canada-U.S. 10-year spread was 1.2 basis points less negative at -34.8 basis points, its smallest gap since Jan. 20 last year, as Canadian government bonds underperformed. Canada's gross domestic product data for February is awaited on Friday. It is expected to show economic growth declined by 0.2 percent in the month, pulling back from a strong start to the year. (Reporting by Fergal Smith; Editing by Bernadette Baum)
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