CANADA FX DEBT-C$ hits 4-month low on euro zone worries

* C$ at C$1.0296 vs US$, or 97.12 U.S. cents
    * Touches 4-mth low at C$1.0301
    * Spanish debt woes, Greek exit fears weigh
    * Canadian 10-, 30-year bond yields at record low

    By Jon Cook	
    TORONTO, May 25 (Reuters) - The Canadian dollar tumbled to a
four-month low against its U.S. counterpart on Friday as
investors fretted about Spain's deteriorating finances and a
possible Greek exit from the euro.	
    The euro plumbed a 22-month low against the U.S. dollar
after the president of Catalonia, Spain's wealthiest autonomous
region, said the region is running out of options for
refinancing more than 13 billion euros ($16.27 billion) in debt
that comes due this year. 	
    "There's a lot of uncertainty regarding Europe, and the
Canadian dollar, which is largely a play off risk sentiment, is
reacting accordingly," said Mazen Issa, macro strategist at TD
Securities. "With risk sentiment as bruised as it is, it's hard
to see it going the other way for the moment."	
    The Canadian currency fell as low as C$1.0301 against the
U.S. currency, or 97.07 U.S. cents, its lowest level since Jan.
    Worries were compounded on Friday after Belgium's deputy
prime minister, Didier Reynders, issued a warning over Greece,
saying it would be a "grave professional error" if central banks
and companies were not preparing for a Greek exit from the euro
    Greeks vote again on June 17, with polls showing a close
race between parties supporting and opposing the austerity
measures that are part of the terms of the country's
international bailout, keeping markets on tenterhooks.	
    Issa saw the currency weakening further in the weeks leading
up to the Greek elections, possibly re-testing December lows
around C$1.04.	
    "It's probably going to be a little bit messy in the
markets," said Issa. 	
    At 1:03 p.m. (1703 GMT), the Canadian dollar was at
C$1.0296 against the U.S. dollar, or 97.12 U.S. cents, down from
Thursday's close at C$1.0271 versus the greenback, or 97.36 U.S.
    German consumer morale held steady going into June while
Chinese exports showed signs of recovery in early May,
countering recent data that suggested Germany, Europe's growth
engine, was no longer immune from the region's debt crisis and
factory output in China, the world's number two economy, was
    Analysts said trading would likely remain subdued ahead of
the long U.S. holiday weekend. U.S. financial markets will be
closed on Monday for the Memorial Day holiday.	
    "Markets are all pretty flat and it is the U.S. three-day
weekend, that tends to suppress appetite for taking risk," said
Adam Cole, global head of FX strategy at RBC Capital Markets in
    Uncertainty in Europe has hurt the Canadian dollar because
investors have fled to the safety of the U.S. dollar and
government debt.	
    Canadian government bond prices climbed across the curve
with the two-year bond up 11 Canadian cents to yield
1.089 percent, while the benchmark 10-year bond 
climbed 43 Canadian cents to yield 1.822 percent.	
    The safe-haven buying drove longer-term Canadian bond yields
to record lows. The 10-year yield sank as far as 1.796 percent,
while the 30-year bond yield hit an all-time low of
2.336 percent.