REFILE-CANADA FX DEBT-C$ slide limited by euro zone optimism

Thu Oct 13, 2011 4:57pm EDT
 
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 (Refiles to fix date in first paragraph)
 * C$ closes at C$1.0197 to US$, or 98.07 U.S. cents
 * Bond prices rise as equities slump
 By John McCrank
 TORONTO, Oct 13 (Reuters) - The Canadian dollar weakened
against the U.S. dollar on Thursday as commodity prices fell on
soft trade data out of China, but the currency clawed back most
of its early losses on optimism that Europe was finally getting
a handle on its debt problems.
 The value of the currency ranged from C$1.0165, or 98.38
U.S. cents to C$1.0273, or 97.34 U.S. cents during the day, as
the mood of investors moved from embracing risk to avoiding it,
and back again.
 Optimism over the state of the global economy took a hit
early on in the day from weaker than forecast trade data out of
China, which pointed to slowing world economic growth.
[ID:nL3E7LD191]
 That took the steam out of commodity prices, which weighed
on the resource-linked Canadian dollar. Canada is the top oil
exporter to the United States and is a major producer of base
metals and precious metals.
 The price of U.S. crude oil, which up until Wednesday had
risen 13 percent over the previous five sessions, fell $1.34 to
settle at $84.23 a barrel. [ID:nN1E79C1EA] O/R
 Gold, silver, and copper prices also fell on the back of
the Chinese data. MET/L GOL/
 "There was some concern in the wake of the Chinese trade
numbers, which showed softening in both export and import
growth in September," said Doug Porter, deputy chief economist
at BMO Capital Markets, who added that it should not be
surprise that global growth had cooled slightly.
 "So, while that initially rattled the market ... there is
still some underlying optimism that the worst case scenario is
being taken off the table for Europe."
 Slovakia approved a plan to bolster the euro zone's rescue
fund on Thursday, becoming the last of the 17 members in the
bloc to do so, clearing the way for a bolder effort to tackle
Europe's sovereign debt crisis, which threatens global
financial stability. [ID:nL5E7LD3VW]
 The Canadian dollar CAD=D3 closed the North American
session at C$1.0197 to the U.S. dollar, or 98.07 U.S. cents,
down slightly from Wednesday's North American close of C$1.0173
to the U.S. dollar, or 98.30 U.S. cents.
 On Wednesday, the currency touched its highest level versus
the greenback since Sept. 22 hitting C$1.0135, or 98.67 U.S.
cents.
 Trade data out of Canada on Thursday came in slightly
better than expected, with the trade deficit growing to C$622
million ($610 million) in August as imports grew at a faster
rate than exports. Analysts had forecast the deficit would be
C$1.0 billion. [ID:nN1E79C09B]
 On the radar for investors, G20 finance ministers and
central bank governors are meeting in Paris on Thursday and
Friday ahead of a G20 summit next month in Cannes, France.
 Corporate earnings season has also kicked off, and gets
into full swing next week.
 "Obviously, European woes are still in the foreground, but
if we can get through this weekend without any major
disturbances in the euro zone, earnings are going to be the
major focus next week," Steve Butler, director of foreign
exchange trading at Scotia Capital.
 Another focus for markets will be U.S. retail sales numbers
for the month of September, due to be released on Friday.
 Canadian bond prices were higher across the board as
declines in equity markets increased demand for the safety of
government debt. [US/]
 A U.S. Treasury auction of $13 billion in 30-year bonds
that attracted strong interest was also supportive of the
market, Porter said.
 The two-year Canadian government bond CA2YT=RR rose 12
Canadian cents to yield 0.987 percent, while the 10-year bond
CA10YT=RR climbed 57 Canadian cents to yield 2.289 percent.
The 30-year bond rose C$1.25 to yield 2.891 percent.
 (Reporting by John McCrank; editing by Rob Wilson)