CANADA FX DEBT-C$ recovers after falling on Europe elections

* C$ slightly higher at C$0.9929 vs US$, or $1.0072
    * Hits near 3-week low after Europe elections rattle
    * Bond prices lower across the curve

    By Jennifer Kwan	
    TORONTO, May 7 (Reuters) - The Canadian dollar recovered on
Monday after stumbling to its lowest level in almost three weeks
against its U.S. counterpart on worries that anti-austerity
election results in Europe could thwart the region's drive to
contain its debt crisis.	
    At around 2:30 p.m. (1830 GMT), the Canadian dollar was at
C$0.9929 versus the U.S. dollar, or $1.0072, slightly higher
than Friday's finish at C$0.9955 versus the U.S. dollar, or
    The Canadian currency managed to eke out the small gain and
recovered after getting wound up in an overnight market rout 
after weekend elections in Greece and France saw incumbents
defeated. The results of the weekend elections in the two
European countries heightened the uncertainty of the path ahead
for the euro-zone debt crisis. 	
    But by midday on Monday world markets took political
upheaval in Europe largely in stride, with the euro recovering
from sharp losses and local equity markets up. 	
    "I think this market was pretty well positioned for the
results that came out. I think it's a little bit of the
sell-the-rumor, buy-the-fact scenario unfold," said Matt
Perrier, director of foreign exchange sales at BMO Capital
    Earlier the Canadian dollar touched a low of C$0.9988, or
$1.0012, its weakest level against the greenback since April 17.	
    Greece's vote, combined with the victory of Socialist
Francois Hollande over incumbent Nicolas Sarkozy in a French
presidential election, will raise pressure on Europe's
paymaster, Germany, to pursue a more growth-oriented approach to
the crisis.   	
    "In France it seemed to be largely expected ... people were
maybe a little more surprised at the more tenuous coalition that
could exist in Greece," said David Tulk, chief Canada macro
strategist at TD Securities.	
    "This is consistent with a theme that as good as we think
that things are in Europe, we still are nowhere near out of the
woods, so prepare for more volatility in the interim." 	
    The signs of a renewed political crisis in Europe came just
as Friday's downbeat U.S. nonfarm payrolls report dealt a blow
to hopes of recovery for the world's largest economy.	
    In the short term, BMO's Perrier saw the Canadian currency
trading in a tight range of C$0.9900 to C$0.9938 against the
    Canadian bond prices were most lower across the curve, with 
   Canada's 2-year bond down 4 Canadian cents to
yield 1.271 percent, while the benchmark 10-year bond
 sank 10 Canadian cents to yield 2.030 percent.