CANADA FX DEBT-C$ ends lower on weakness in GDP data, shrs, oil
* C$ ends at C$1.0950, or 91.32 U.S. cents
* Economy shrinks, but recovery in view
* Bond prices end higher across curve (Recasts)
By Frank Pingue
TORONTO, Aug 31 (Reuters) - Canada's dollar fell versus the U.S. currency on Monday given a mix of weaker equities, oil prices and data that showed a slightly sharper-than-expected second-quarter contraction in the domestic economy
The currency tumbled to its lowest level since Aug. 19 in the aftermath of data that showed Canada's economy shrank overall in the second quarter to mark its sharpest nine-month downturn in half a century. [ID:nN31431924]
The drag from North American equities early in the session also aided the currency's slide to the intraday low of C$1.1094 to the U.S. dollar, or 90.14 U.S. cents.
Canada's dollar began the North American session down as a slide in Chinese equities overnight and sharp drop in oil prices combined to stoke risk aversion.
"You would've thought given what went on with equity markets and on the data front we'd see some (more) weakness in the Canadian dollar," said George Davis, chief technical strategist at RBC Capital Markets.
"But I think we've seen equity markets try to stabilize a little bit here and trade off their lows so I think that's kind of helped keep the selloff in the Canadian dollar in check."
The Canadian dollar recovered slightly to close at C$1.0950 to the U.S. dollar, or 91.32 U.S. cents, down from C$1.0919 to the U.S. dollar, or 91.58 U.S. cents at Friday's close.
The GDP numbers were not all bad as they showed the economy grew 0.1 percent in June after 10 months of decline, confirming the recession has bottomed out and possibly putting the economy on track for solid third-quarter gains.
It was the last piece of Canadian data until Friday's key jobs report, which is expected to show the economy shed 10,000 jobs in August while the unemployment rate is pegged to rise to 8.7 percent.
Another drag on the Canadian dollar was the price of oil CLc1, a key Canadian export, which fell nearly 4 percent to below $70 a barrel [ID:nSYD487149].
Separately, Canadian Finance Minister Jim Flaherty, who warned in early August that steps could be taken to curb a sharp rise in the Canadian dollar, said in Vancouver on Sunday he was pleased with the currency's recent stability. [ID:nN30417133]
BOND PRICES ALL HIGHER
Canadian bond prices were stronger following the weak domestic GDP data and slide in North American equity markets, but the move was held in check ahead of Friday's jobs data and as equities moved off their lows.
The S&P/TSX composite index .GSPTSE ended down 1 percent at 10,868.21, while the Dow Jones industrial average .DJI slipped 0.5 percent.
The two-year bond CA2YT=RR rose 3 Canadian cents to C$99.45 to yield 1.282 percent, while the 10-year bond CA10YT=RR rose 13 Canadian cents to C$102.05 to yield 3.379 percent.
The 30-year bond CA30YT=RR edged up 20 Canadian cents at C$118.60 to yield 3.897 percent.
Canadian bonds mostly underperformed their U.S. counterparts. The Canadian 10-year bond yield was 2.7 basis points below its U.S. counterpart, compared with 5.4 basis points on Friday. (Editing by Jeffrey Hodgson)
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