CANADA FX DEBT-C$ gives way to fiscal concerns, China move fades

Mon Jun 21, 2010 4:49pm EDT
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* C$ slips to 97.62 U.S. cents

* China move to allow yuan flexibility boosts markets

* Canadian officials encouraged by yuan move but wary

* BoC says risks in Canada's financial system higher

* Canadian bond prices fall as equities rise (Updates to close)

By Ka Yan Ng

TORONTO, June 21 (Reuters) - The Canadian dollar tumbled from a five-week high against the U.S. currency to end lower on Monday as market enthusiasm for China's plans to allow its currency more flexibility gave way to concerns about fiscal discipline.

China's weekend announcement that it will let the yuan rise was seen as a signal of confidence in its economy, boosting equity markets worldwide, as well as commodity prices.

The rise in risk sentiment helped the Canadian dollar climb to C$1.0138 to the U.S. dollar, or 98.64 U.S. cents, its highest level since May 13.   Continued...