CANADA FX DEBT-C$ sags vs greenback; outshines euro, pound
* C$ closes lower at 97.99 U.S. cents
* C$ hits multi-year highs vs euro, sterling
* Bond prices gain across the curve
By Claire Sibonney
TORONTO, May 13 (Reuters) - The Canadian dollar fell slightly against the U.S. dollar on Thursday as prices for oil and other riskier assets were hit by soft U.S. jobs data and worries that growth in Europe will slow, which pushed the market towards the safe-haven greenback.
But the Canadian currency made further gains against the euro, rising as high as C$1.2723, or 78.60 euro cents, its strongest level since July 2001.
It also hit a multi-year high versus sterling at C$1.4840, or 67.39 pence.
"The market is seeking a non-European bid and Canada's attributes are compelling," said Jack Spitz, managing director of foreign exchange at National Bank Financial.
While investors were relieved by news that heavily indebted Spain and Portugal were taking steps to cut budget deficits, they also feared this would slow down euro zone growth. They fretted as well about growth risks in the British economy. [FRX/]
Also spoiling appetite for risk was data that showed the number of U.S. workers filing for jobless benefits fell slightly last week, suggesting the U.S. unemployment rate will remain elevated even as recovery in the labor market becomes entrenched. [ID:nN13144732]
The commodity-linked Canadian dollary was affected by falling oil prices, which dropped on high U.S. inventories and the concerns about economic recovery. [O/R]
Before Thursday, the Canadian dollar put in four sessions of gains, supported by Canada's relatively healthy fundamentals and a spate of data showing faster-than-expected economic recovery.
"On a relative basis Canada looks quite good," said Mark Chandler, head of Canadian fixed income and currency strategy at RBC Capital Markets.
"If the thing that markets are going to worry themselves about right now is debts and deficits then Canada stands to do relatively well on the currency front as a result."
The Canadian dollar CAD=D4 finished the North American session at C$1.0205 to the U.S. dollar, or 97.99 U.S. cents, down from C$1.0198 to the U.S. dollar, or 98.06 U.S. cents, at Wednesday's close. Earlier in the day, it traded as high as 98.91 U.S. cents, its highest level in more than a week, and as low as 97.96.
STOCKS DOWN, BONDS UP
Canadian government bond prices edged higher across the curve, following U.S. Treasuries, which rose as losses in the euro and struggling North American stocks enhanced the allure of safe-haven government debt.
Price gains were limited, however, by some minor disappointment over the results of a U.S. auction of $16 billion of 30-year bonds.
"A poorly received auction put some pressure on bonds ... but the dominant move in bonds late in the day was weak equity markets," Chandler said.
The two-year government bond CA2YT=RR was up 14 Canadian cents to C$99.12 to yield 1.942 percent, while the 10-year bond CA10YT=RR jumped 67 Canadian cents to C$99.87 to yield 3.516 percent.
Canadian bonds outperformed their U.S. counterparts across the curve. The Canadian 10-year bond yield was 2.7 basis points below the U.S. 10-year yield, compared with 2.5 basis points above on Wednesday.
In new issues, the province of New Brunswick sold C$500 million ($490 million) of 10-year notes. [ID:nN13182789]
The province of Ontario sold C$750 million of 10-year notes in a reopening of an existing 4.2 percent issue. [ID:nN13271472] (Additional reporting by Ka Yan Ng, editing by Peter Galloway)
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