CANADA FX DEBT-C$ back below parity amid Greece, Spain worries

* C$ down at C$1.0049 vs US$, or 99.51 U.S. cents
    * Bond prices edge up across curve

    By Claire Sibonney	
    TORONTO, May 9 (Reuters) - The Canadian dollar tumbled to
its lowest level in nearly a month on Wednesday, back below
parity against the U.S. dollar as political disarray in Greece
and the rising costs of fixing Spain's banks fueled fears that
Europe's debt crisis was worsening.	
    The market's immediate attention was on Athens where efforts
to form a government were expected to fail, putting its ability
to meet the terms of its bailout deal in doubt and raising the
possibility of Greece being forced out of the euro.	
    Meanwhile, Spain will demand banks set aside another $45
billion against loans to builders as it battles to rebuild
confidence, sources told Reuters. Huge bank losses have raised
fears the country may need an international bailout.

    "It's Europe by and large ... it all lends itself to a
market that is led and dominated by the flight to quality and
flight to liquidity flow that we see in times like this," said
Jack Spitz, managing director of foreign exchange at National
Bank Financial.	
    "The market is looking to buy the U.S. dollar, buy the yen.
Back to rumors, back to speculation about how bad things can
get, rather than how good things can get, so 'the glass is half
empty' is really the sentiment that the market seems to be
taking from what's going on in Europe."	
    At 7:52 a.m. (1152 GMT), the Canadian dollar stood
at C$1.0049 versus the U.S. dollar or 99.51 U.S. cents, down
from Tuesday's North American session close at C$0.9983 versus
the U.S. dollar, or $1.0017. Earlier the currency hit a session
low of C$1.0053, its weakest level since April 11.	
    "It's more or less the 200-day moving average. We're hearing
of stops at C$1.0060-C$1.0070 but we're still trading inside the
range," added Spitz, noting Canadian monthly employment data due
Friday will provide further direction.	
    Canadian bond prices edged higher, tracking firmer U.S.
Treasuries amid the risk-off tone in markets. 	
    Canada's 2-year bond rose 5 Canadian cents to
yield 1.200 percent, while the benchmark 10-year bond
 added 24 Canadian cents to yield 1.946 percent.