CANADA FX DEBT-C$ weakens as data weighs on global outlook

* C$ at C$0.9803 vs the US$, or $1.0201
    * U.S. jobless claims weaker than expected
    * Manufacturing sector at weakest quarter in 3 years
    * Euro zone, China data disappoint
    * Bond prices higher across curve

    By Solarina Ho
    TORONTO, Sept 20 (Reuters) - The Canadian dollar broke
through this week's narrow trading range on Thursday, weakening
against the U.S. currency after disappointing U.S. data, falling
oil prices and weak Chinese and euro zone data heightened
concerns about global economic growth.
    The number of Americans filing new claims for jobless
benefits held near two-month highs last week, suggesting some
weakening in labor market conditions, while its manufacturing
sector saw its weakest quarter in three years as foreign demand
for U.S. goods continued to fade, an industry survey showed.
    Overseas, the downturn in activity in the euro zone's
service sector steepened this month at the fastest pace since
July 2009. 
    "The weaker euro zone data has tempered risk appetite a
little bit. As well, we saw weaker-than-expected U.S. jobless
claims futures, which cast some doubt on the health of the U.S.
recovery and the outlook for Canadian exports," said Sal
Guatieri, senior economist at BMO Capital Markets.
    Meanwhile, manufacturing in China contracted for an 11th
month in a row in September, according to a private sector
survey of factory managers that indicated the world's second
largest economy remains on track for a seventh quarter of
slowing growth.
    The commodities-linked currency was also pressured by crude
prices, which were hit by the slew of bearish news, as well as a
pledge by Saudi Arabia to keep oil prices from rising too high.
    At 9:25 a.m. ET (1325 GMT), Canada's dollar stood
at C$0.9803 to the U.S. dollar, or $1.0201, weaker than
Wednesday's North American session finish of C$0.9745, or
    The currency had been trading in a narrow range this week as
markets digested the implications of new monetary policies in
the United States, Europe and Japan aimed at stimulating growth.
    Some currency strategists say the Canadian dollar - which
was trading at stronger-than-expected levels - could weaken to
the C$0.98 to C$0.99 levels in the near term if it managed to
break through the C$0.9765 to C$0.9780 range.
    Canadian government bond prices rose across the curve. The
two-year bond climbed 3.5 Canadian cents to yield
1.141 percent, while the benchmark 10-year bond 
gained 37 Canadian cents, yielding 1.847 percent.