CANADA FX DEBT-C$ slightly stronger as investors watch Europe
* C$ at C$1.0180 vs US$, or 98.23 U.S. cents
* European uncertainty rocks markets
* Bonds mixed
By Andrea Hopkins
TORONTO, Oct 20 (Reuters) - The Canadian dollar was slightly stronger against its U.S. counterpart in early trade on Thursday as the push-pull of the euro zone efforts to come up with a plan to address the region's debt crisis continued.
The euro was up sharply and Wall Street looked set for a slightly higher opening, suggesting some risk-on sentiment, but world stocks as measured by MSCI .MIWD00000PUS were down around two-thirds of a percent and European shares dipped.
"Markets have pulled back a bit waiting to see what's going to happen in Europe. I think it's going to be a sit-tight backdrop for cyclicals and the Canadian dollar," said David Watt, senior currency strategist at Royal Bank of Canada.
At 9:09 a.m. (1309 GMT), the Canadian dollar CAD=D3 stood at C$1.0180 to the U.S. dollar, or 98.23 U.S. cents, up slightly from Wednesday's North American session close at C$1.0202 to the U.S. dollar, or 98.02 U.S. cents.
Watt said the Canadian currency could face choppy trade as investors tried to decipher developments in Europe, but should trade in a relatively tight range between C$1.0125 and C$1.0225.
"Everything seems to hinge on Europe nowadays, it's a ridiculous development, but every idle prattle of any minor EU official seems to have market moving impact. It's nuts -- there is no clarity and no information," Watt said.
Doubts about the euro zone's ability to come up with a comprehensive plan to address the region's debt crisis shook financial markets, although confirmation that a bailout fund could buy bonds took the edge off the worst fears. [MKTS/GLOB]
Optimism had been growing that the weekend meeting of European Union leaders in Brussels would come up with a substantial plan for dealing with the debt crisis, primarily through ramping up the bloc's bailout mechanism, the EFSF.
But French President Nicolas Sarkozy said on Wednesday that plans to tackle the crisis had stalled with Paris and Berlin at odds over how to increase the bailout fund. [ID:nL5E7LJ3YJ]
In economic news, Canadian wholesale trade grew by a less-than-expected 0.2 percent in August from July, pushed higher by the machinery, equipment and supplies sector, Statistics Canada data indicated on Thursday. Analysts had expected an increase of 0.5 percent. [ID:nN1E79J0B3]
U.S. data showed new claims for unemployment benefits fell last week to 403,000, just above economist forecast for a drop to 400,000 claims. [ID:nN1E79J0BQ]
Canadian bond prices were mixed in early trade. The two-year Canadian government bond CA2YT=RR was down 3.5 Canadian cents to yield 1.054 percent, while the 10-year bond CA10YT=RR was flat, yielding 2.338 percent. (Editing by Jeffrey Hodgson)
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