CANADA FX DEBT-C$ lower as "fiscal cliff", M&A uncertainty weighs

* C$ at C$0.9949 to US$, or $1.0051
    * Investors fret about U.S. budget talks, pending
acquisition decisions
    * Currency seen trading between $0.99 and parity

    By Alastair Sharp
    TORONTO, Nov 28 (Reuters) - The Canadian dollar was
marginally weaker against the U.S. dollar on Wednesday, as
growing concern over a political standoff in the United States
weighed on risk appetite and investors awaited approval of two
pending resource acquisitions.  
    The risk proxy Canadian currency followed most world equity
markets lower, making for a third day of weakness after last
week's solid performance.
    "Canada still seems an OK story but there's uncertainty
around the U.S. 'fiscal cliff' (and there is) still uncertainty
around some of the big M&A deals, the Nexen and Progress deals,"
said Shane Enright, executive director of foreign exchange sales
at CIBC World Markets.
    A leading U.S. Democrat on Tuesday lamented the lack of
progress in talks to avoid a looming fiscal crisis which
threatens to push the world's largest economy back into
    China's state-owned CNOOC Ltd and its Canadian
takeover target Nexen Inc have withdrawn and
resubmitted an application for U.S. approval of their $15.1
billion deal, as Canada gets close to its decision on whether to
approve the transaction. 
    At 8:17 a.m. (1317 GMT) the Canadian dollar was
trading at C$0.9949 to the greenback, or $1.0051, compared with
C$0.9947, or $1.0053, at Tuesday's North American close.
    Enright said the currency would likely trade between C$0.99
and equal value with the U.S. currency in the short term.
    Applications for U.S. home mortgages fell last week, though
demand for mortgage purchases rose for a fourth straight week,
an industry group said. 
    Prices for Canadian government debt were higher across the
curve, with the two-year bond up 1.5 Canadian cents
to yield 1.087 percent and the benchmark 10-year bond
 rising 25 Canadian cents to yield 1.702 percent.