CANADA FX DEBT-C$ ends a touch weaker on Spain bailout worry

* C$ ends weaker at C$0.9806 vs US$, or $1.0198
    * Concern about Spain bailout offsets strong retail data
    * Bond prices turn negative across the curve
    * July retail sales jump by 0.7 percent from June

    By Andrea Hopkins
    TORONTO, Sept 25 (Reuters) - The Canadian dollar ended
slightly weaker against its U.S. counterpart on Tuesday as
global worries about a Spanish bailout outweighed the currency's
early rally on strong Canadian retail sales data.
    The euro and world stock markets came under pressure late in
the day as investors fled riskier assets on concerns about
global growth and a bailout for debt-laden Spain. 
    Spain told euro zone finance ministers on Friday it will set
clear deadlines for structural reforms by the end of the month,
a move European diplomats said would pave the way for an aid
request before long to help it tackle its debt pile. 
    Madrid's borrowing costs have fallen sharply since the 
European Central Bank said it was ready to buy Spanish bonds,
but big borrowing needs before the year-end and a deepening
recession have made most analysts and policymakers believe it is
only a matter of time before it will require help.
    The gloom over Spain more than offset data that showed
strong Canadian retail sales in July, an unexpectedly bullish
sign that spurred the Canadian dollar to a session high.
    "It's been a funny day. CAD initially rallied on fundamental
domestic data - retail sales data that were stronger than
expected - but since then the more global theme of Europe has
resurfaced and CAD has lost its rally," said Camilla Sutton,
chief currency strategist at Scotiabank.    
    "In the last couple of hours, euro has dropped lower on the
back of rising expectation that Spain is about to ask for a
bailout and that the reforms will be quite strict. And so as
we've seen euro dip lower here, we've also seen CAD weaken off."
    The Canadian dollar ended the day at C$0.9806
versus the U.S. dollar, or $1.0198, down from Monday's North
American session finish of C$0.9788, or $1.0217. 
    The session high was C$0.9756, hit as traders took the
retail sales data as a sign of consumer strength after a string
of soft economic indicators.
    Retail sales jumped by 0.7 percent from June to a near
record C$38.99 billion in July, in part due to higher sales of
new cars. The increase was far greater than the modest 0.1
percent advance forecast by market analysts. 
    "If anything it means consumers aren't on a downward
spiral," said Emanuella Enenajor, economist at CIBC World
Markets. But she cautioned that the report doesn't change the
fact that consumers still face significant headwinds, including
the slow pace of hiring, decelerating consumer credit and
elevated debt loads. 
    Canadian government bond prices were mixed across the curve.
The two-year bond fell 2 Canadian cents to yield
1.125 percent, while the benchmark 10-year bond lost
3 Canadian cents, yielding 1.819 percent. The 30-year bond
 added 20 Canadian cents to yield 2.381.