CANADA FX DEBT-C$ flat and quiet as investors watch U.S. talks

* C$ flat at C$0.9921 vs US$, or $1.0080
    * Trading quiet as market awaits fiscal cliff developments
    * Bond prices drift lower

    By Andrea Hopkins
    TORONTO, Dec 27 (Reuters) - The Canadian dollar was largely
unchanged against its U.S. counterpart in quiet trading on
Thursday as investors wait for developments in the U.S. budget
talks to avert a fiscal cliff and square positions ahead of the
    Markets have been in limbo since last week when President
Barack Obama and U.S. lawmakers suspended talks until after
Christmas on avoiding $600 billion of spending cuts and tax
increases that some economists say threaten to send the economy
back into recession. 
    "We're starting off very quietly as we did yesterday,"said
Matt Perrier, a director of foreign exchange sales at BMO
Capital Markets.
    "We may see some year-end things that corporates need to get
done, that will hopefully give us some movement, and we've also
got the whole fiscal cliff situation coming down to the wire, so
there is potential for things to move, we'll just have to wait
and see."
     At 8:43 a.m. (1343 GMT),  the Canadian dollar 
stood at C$0.9921 versus the U.S. dollar, or $1.0080, just
slightly weaker than Monday's North American session close at
C$0.9913 versus the U.S. dollar, or $1.0088.
    North American markets were closed on Dec. 25 and most
Canadian markets remained shut on Wednesday for Boxing Day, so
Thursday was the first day of normal trade since markets closed
on Monday, Christmas Eve.
    Efforts to prevent the U.S. economy from going over a
"fiscal cliff" stirred back to life on Wednesday with less than
a week to go before potentially disastrous tax hikes and
spending cuts kick in at the New Year. 
    In a sign that there may be a way through deadlock in
Congress, Republican House of Representatives Speaker John
Boehner urged the Democrat-controlled Senate to act to pull back
from the cliff and offered to at least consider any bill the
upper chamber produced. 
   President Barack Obama will try to revive budget crisis talks
- which stalled last week - when he returns to Washington on
Thursday after cutting short his Christmas holiday in Hawaii. 
    BMO's Perrier said he doesn't expect much movement in the
Canadian dollar as 2012 draws to a close, given the tight range
it has traded in recent weeks.
    "It will probably close around these levels, in the C$0.9850
and C$0.9950 area. There is certainly some uncertainty with
respect to what happens in the U.S. - if we get a fiscal cliff
deal or we don't see a fiscal cliff deal - that could create
some movement into tomorrow or Monday," he said.
    "But given the price action in the last couple of weeks, I'd
think we'll probably close (2012) around where we are now."
    Canadian government bond prices edged lower along the longer
end of the curve. The two-year bond was down 4.5
Canadian cents, yielding 1.147 percent, while the benchmark
10-year bond fell 3 Canadian cents to yield 1.822