CANADA FX DEBT-C$ at 5-week low as US budget talks struggle

* C$ ends lower at C$0.9965 vs US$, or $1.0035
    * U.S. lawmakers meeting in bid to avoid fiscal cliff
    * Bond prices higher across the curve

    By Andrea Hopkins
    TORONTO, Dec 28 (Reuters) - The Canadian dollar ended slightly weaker
against its U.S. counterpart on Friday as the White House and U.S. lawmakers
made a late attempt to avert the "fiscal cliff" and investors choose safe-havens
to wait out the negotiations.
    World stocks slipped and the U.S. dollar gained as the deadline looms for
reaching a budget deal to avert massive tax increases and spending cuts that
could drag the U.S. economy, the destination for most Canadian exports, into
    President Barack Obama was not planning to make a new offer to avert the tax
hikes and spending cuts that loom on Jan. 1 at a White House meeting with
congressional leaders on Friday, a source familiar with the meeting said.
    At the meeting, Obama was set to ask lawmakers to hold a vote on a plan that
would allow taxes to rise on those who earn $250,000 and up, and that would
extend unemployment insurance benefits, according to the source.
    "We saw some hint of progress on the fiscal cliff negotiations, a mini deal,
and for everyone that is a disappointment," said Adam Button, currency analyst
at ForexLive in Montreal.
    Commodity-linked currencies like the Canadian dollar tend to benefit when
U.S. budget negotiations run smoothly, but when there are snags, investor flows
go into the highly liquid U.S. dollar.
    The Canadian dollar ended the North American session at C$0.9965
versus the U.S. dollar, or $1.0035, weaker than Thursday's North American
session close at C$0.9949 versus the U.S. dollar, or $1.0051.
    Earlier in the session the Canadian currency hit C$0.9969, its weakest level
since Nov. 23, but seemed bound by a tight range approaching parity with the
U.S. dollar.
    "The Canadian dollar is once again just above parity and in no rush to go
anywhere, which is fitting - we end the year very close to parity because that
has been the story day after day in 2012," Button said.
    He warned, however, that the final trading day of the year on Monday may
bring some volatility as investors square positions.
    "Historically, this holiday time is very quiet, but we've had very large
moves in the yen and euro, so I would rule out nothing on Monday in terms of
substantial moves. Desks are thinly staffed but that hasn't kept markets from
moving," he said. "And in this kind of environment, you can't look for moves to
make sense - you just have to go with momentum."
    Canadian government bond prices were higher across the curve on the flight
to safety. The two-year bond was up 1 Canadian cent, yielding 1.132
percent, while the benchmark 10-year bond rose 18 Canadian cents to
yield 1.774 percent.