CANADA FX DEBT-C$ stuck lower after weak GDP data
* C$ down at C$1.1071 to the U.S. dollar
* Economy shrinks, but recovery in view
* Bond prices mostly higher across curve (Recasts)
By Frank Pingue
TORONTO, Aug 31 (Reuters) - Canada's dollar was stuck lower versus the U.S. currency on Monday given a mix of lower equities, oil prices and data that showed a slightly sharper than expected contraction in the domestic economy.
According to the data, Canada's economy shrank at an annual rate of 3.4 percent in the second quarter. But Canada also eked out a 0.1 percent monthly gain in June compared with May, which marks a tentative sign of economic recovery. [ID:nN31431924]
The domestic currency bounced around immediately after the data before eventually holding steady above its pre-data level. But it remained lower for the session as the mix of a sharp fall in Chinese equities and lower oil prices stoked risk aversion.
"I think the currency continues to take direction from the global markets over the very near term, and we saw some disappointing market moves out of China and that's probably going to carry the moves for the day," said Craig Wright, chief economist at Royal Bank of Canada.
At 9:20 a.m. (1320 GMT), the Canadian unit was at C$1.1071 to the U.S. dollar, or 90.33 U.S. cents, down from C$1.0919 to the U.S. dollar, or 91.58 U.S. cents at Friday's close.
But that was above its pre-data level of about C$1.1081 to the U.S. dollar, or 90.24 U.S. cents.
The quarterly and monthly Canadian GDP figures were below expectations and together with a revised first-quarter figure, showed the recession was deeper than many had believed.
After the data, Canada's dollar tumbled as low as C$1.1090 to the U.S. dollar, or 90.17 U.S. cents and jumped as high as C$1.1065 to the U.S. dollar, or 90.37 U.S. cents.
Another drag on the Canadian dollar was the price of oil CLc1, a key Canadian export, which fell more than two percent to around $71 a barrel [ID:nSYD487149].
Separately, Canadian Finance Minister Jim Flaherty, who warned this month 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]
Canadian bond prices were mostly higher across the curve as a slide in global equities ramped up demand for more secure assets like government debt.
Global stocks were down as investors remained nervous about whether the major economies can pull convincingly out of recession. [ID:nLV105839]
The two-year bond CA2YT=RR was up 2 Canadian cents at C$99.44 to yield 1.285 percent, while the 10-year bond CA10YT=RR rose 3 Canadian cents to C$102.95 to yield 3.391 percent.
The 30-year bond CA30YT=RR was down 25 Canadian cents at C$118.15 to yield 3.920 percent. The comparable U.S. bond yielded 4.231 percent. (Additional reporting by Jennifer Kwan; Editing by Jeffrey Hodgson)
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