CANADA FX DEBT-C$ hits near 3-wk high after Obama win, then slips

* C$ at C$0.9930 vs US$ or $1.0070
    * Reaches C$0.9875 shortly after Obama victory
    * ECB comments weigh on sentiment

    By Solarina Ho
    TORONTO, Nov 7 (Reuters) - Canada's dollar weakened modestly
against the U.S. currency on Wednesday after comments from the
European Central Bank on the region's tough economic outlook
erased gains made overnight following U.S. President Barack
Obama's re-election.
    Joining a brief rally in other commodity-linked currencies,
the Canadian dollar earlier strengthened to a near
three-week high of C$0.9875 to the greenback, or $1.0127.
    Obama defeated Republican challenger Mitt Romney on Tuesday
night after a grueling presidential race. His fellow Democrats
retain control of the Senate and Republicans keep the majority
in the House of Representatives, however, giving them power to
curb the president's legislative ambitions. 
    "No huge surprises. It's nice that it was definitive,
because the market would've been a little uptight if we'd had
any sort of delayed result or any questions around it," said Don
Mikolich, executive director, foreign exchange sales at CIBC
World Markets.
    "The Canadian dollar benefited as the results came up
because it'll be a continuation of the quantitative easing
they've been doing, which is generally a negative for the U.S.
    But the currency slipped after ECB President Mario Draghi
said the bank expects the euro zone economy to remain weak "in
the near term", adding that inflation was well contained.
    The central bank also said its new bond-buying program
allows for unlimited interventions in sovereign debt markets and
should dispel concerns about a euro zone break-up.
    As the trading day opened in North America, the Canadian
dollar slipped to C$0.9930 to the U.S. dollar, or $1.0070,
weaker than its North American finish on Tuesday at C$0.9918, or
    "The comments from the ECB ... weighed on sentiment a little
bit so you saw Canada weaken off on that news and I think U.S.
dollar gained some of that safe-haven flow on the risk-off
reaction to it," said Mikolich.
    Now that the U.S. election is over, investor focus will
return to economic data, European developments and the so-called
"fiscal cliff" in the U.S., said Mikolich, adding that the
expected trading range for the Canadian dollar still remained
C$0.9850 to U.S. dollar parity in the near term.
    The price of Canadian government debt rose across the curve.
The two-year government of Canada bond was up 9
Canadian cents to yield 1.072 percent, while the benchmark
10-year bond was up 67 Canadian cents to yield 1.733