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* C$ drops below 80 U.S. cents after trade data
* Canada posts first trade deficit in 32 years
* Bond prices mixed after Tuesday's sharp rally (Adds details and comments)
By Frank Pingue
TORONTO, Feb 11 (Reuters) - The Canadian dollar was pinned lower against the U.S. greenback on Wednesday after data showed Canada posted its first trade deficit in 32 years, adding to the currency's steep slide in the previous session.
Canada had a trade deficit of C$460 million in December as exports fell at a far faster rate than imports. Analysts had forecast a surplus of C$800 million. [ID:nN11]
"Globally, trade slid dramatically at the end of last year, so if you're a country that tends to export a lot, you are probably going to get hammered quite hard in that regard," said David Watt, senior currency strategist at RBC Capital Markets.
"The underlying story is it's a Canadian dollar-bearish story in an environment where global trade is still slowing down and the outlook for global growth is still uncertain."
Immediately after the data was released, the Canadian dollar dropped as low as C$1.2515 to the U.S. dollar, or 79.90 U.S. cents, from its pre-data level around C$1.2459 to the U.S. dollar, or 80.26 U.S. cents.
By 9:40 a.m. (1440 GMT), the currency had recovered a touch to C$1.2505, or 79.96 U.S. cents, which was still down from Tuesday's session close of C$1.2462, or 80.24 U.S. cents.
The decline in the Canadian currency comes on the heels of a 2.4 percent skid on Tuesday when demand for risky assets was sapped after the release of a U.S. government bank bailout plan that did not meet the high expectations that were built into financial markets.
After being up in early February as much as 1.3 percent, Canada's currency is now down 1.8 percent on the month as a wave of weak data has shored up expectations for another Bank of Canada interest rate cut in March.
The trade figures highlighted how serious an impact the global crisis is having on Canada, which is a leading commodity producer that relies heavily on trade with the United States.
"It was in line with what we've seen in other countries and we'll probably see another dismal report for January so the pain is not going to go away," Watt said. "It's just not a bullish environment for the Canadian dollar at all."
Canadian bond prices were mixed as investors moved back into equities after North American stock markets were hammered on Tuesday on skepticism about whether the U.S. bank bailout plan would be sufficient to bring health back to that country's financial system.
Bond prices rallied on Tuesday, when investors flocked to more secure government debt, but they started to unravel some of those gains early in Wednesday's session.
"I put it down to a little profit-taking after yesterday's strong gains," said Sal Guatieri, senior economist at BMO Capital Markets. "I don't think the trade reports had much impact on the bond market ... the data is really a side show to the policy developments (in the U.S.)."
The interest-rate sensitive two-year bond was down 7 Canadian cents at C$102.77 to yield 1.190 percent, while the 10-year bond was unchanged at C$110.27 to yield 2.976 percent.
The 30-year bond was up 10 Canadian cents at C$122.25 to yield 3.721 percent.