CANADA FX DEBT-C$ touches 2-week low as Greece, U.S. data weigh

Thu Feb 25, 2010 4:45pm EST
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 * C$ dips to 94.40 U.S. cents
 * Stocks, gold price help C$ regain ground      
 * Bonds gain on risk aversion
 (Updates to close, adds details, quotes)
 By Claire Sibonney
 TORONTO, Feb 25 (Reuters) - The Canadian dollar touched a
two-week low on Thursday as market players fled to the
greenback and other safe havens on worries about possible
downgrades to Greece's sovereign debt and sluggish U.S.
economic data.
 But the Canadian currency retraced much of its losses to
close only slightly weaker, as equity markets rallied and gold
prices rose, restoring some investor appetite for the
commodity-linked currency.
 EU inspectors and ratings agencies piled pressure on Greece
to deliver promised cuts to its huge budget deficit, as Athens
prepares to borrow on jittery markets in the middle of a debt
crisis. [ID:nLDE61O20P]
 On the data front, demand for a wide range of U.S.
manufactured goods unexpectedly fell in January, while new
applications for jobless benefits rose again last week,
suggesting a step back in the economic recovery.
 "Ironically when the U.S. numbers are weaker and you get
risk aversion going higher, they tend to buy the U.S. dollar,
along with the yen, which has performed very well as well,"
said Shane Enright, executive director of foreign exchange
sales at CIBC World Markets.
 Helping to offset risk aversion sentiment, Toronto's main
stock index closed almost 1 percent higher on Thursday as
healthy bank earnings and a turnaround in the price of gold
lifted two of the index's biggest sectors. [.TO]
 The Canadian dollar closed at C$1.0593, or 94.40 U.S.
cents, slightly down from Wednesday's close of C$1.0540 to the
U.S. dollar, or 94.88 U.S. cents. Earlier, the currency dropped
to C$1.0680, or 93.63 U.S. cents, its lowest level since Feb.
 Canadian bond prices were higher across the curve, as
investors remained cautious about weak U.S. economic data and
sovereign credit woes in the euro zone.
 The two-year Canadian government bond CA2YT=RR added 10
Canadian cents to C$100.420 to yield 1.287 percent, while the
10-year bond CA10YT=RR rose 35 Canadian cents to C$102.70 to
yield 3.407 percent.
 Canadian bonds lagged their U.S. counterparts at the long
end of the curve, with the difference between 10-year yields
narrowing almost 1 basis point to 23.3 from 24.2 on Wednesday.
 On the supply front, the Bank of Canada said it plans to
auction C$3 billion of government of Canada bonds on March 3
with a coupon of 2.5 percent and maturing in June, 2015.
 The central bank will also auction C$2 billion in 34-day
treasury bills on Feb. 26. [ID:nTOR007222]
 In new issue news, Hydro Quebec, one of Canada's largest
utilities, added C$500 million in a reopening of bonds due Feb.
15, 2050. [ID:nN25251006]
 (Reporting by Claire Sibonney; Editing by Jeffrey Hodgson)