CANADA FX DEBT-C$ weaker as Greek vote relief fades

* C$ at C$1.0256 vs US$, 97.50 U.S. cents
    * Greek election relief rally short-lived
    * Bond prices mixed

    By Allison Martell
    TORONTO, June 18 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Monday as relief at Greece's
pro-bailout election results turned to worry over the broader
euro zone debt crisis.
    Greek voters gave a majority on Sunday to parties that
support the country's economic bailout, easing worries that the
single currency bloc might break apart, but not fears about
other indebted countries in the euro zone.
    "The underlying structural negatives in Europe are still
very large," said Jeremy Stretch, head of foreign exchange
strategy at CIBC World Markets in London. "The relief rally
proved, very much like the Spanish relief rally this time last
week, to be very temporary." 
    Stretch saw particular focus on Spain, and to a lesser
extent Italy. The cost of borrowing for both countries rose on
Monday, and the yield on Spain's 10-year bond rose
above the 7 percent level widely viewed as unsustainable.
    He said the oil market, which fell on Monday, was not
helping the resource-linked Canadian currency. 
    At about 8:10 a.m. (1210 GMT) the Canadian dollar was at
C$1.0256 versus the U.S. dollar, or 97.50 U.S. cents, weaker
than Friday's close at C$1.0222, or 97.83 U.S. cents. Earlier on
Monday, it had weakened as far as about C$1.0265.
    Global markets are expected to stay on edge this week thanks
to a heavy schedule of high-level meetings. 
    The heads of the Group of 20 major industrialized and
developing nations meet in Mexico on Monday and Tuesday, where
they are expected put pressure on Europe's leaders to come up
with a lasting solution to the debt crisis.
    Stretch saw the Canadian dollar trading between about
C$1.019 and C$1.035 into the middle of the week, assuming the
U.S. Federal Reserve does not take action. The Federal Open
Market Committee is meeting on Tuesday and Wednesday.
    Canadian bond prices were mixed across the curve. Canada's
two-year bond rose 1 Canadian cent to yield 0.959
percent, while the benchmark 10-year bond rose 4
Canadian cents, yielding 1.719 percent.