CANADA FX DEBT-C$ gains modestly to end week up 0.3 pct vs US$

* C$ at C$1.0367 vs US$, or 96.46 U.S. cents
    * CPI rises for second month, but weaker than expected
    * Bond prices rise across maturity curve

    By Alastair Sharp
    TORONTO, July 19 (Reuters) - The Canadian dollar ended
slightly stronger against its U.S. counterpart in subdued
trading on Friday, even as Canadian inflation data came in a
little weaker than expected.
    The loonie, as Canada's currency is colloquially known,
gained less than 0.3 percent over the week, in which U.S.
Federal Reserve chief Ben Bernanke calmed some investor jitters
over an eventual winding down of the bank's stimulus program.
    "Broadly, the U.S. dollar was weaker so the Canadian has
benefited a little off that," said Camilla Sutton, chief
currency strategist at Scotiabank.
    She said the unsurprising inflation data kept a lid on
interest rate expectations, as Canada's annual inflation rate
rose in June for a second month, to 1.2 percent, after hitting a
3-1/2-year low in April. 
    Month-over-month figures were slightly weaker than what
economists polled by Reuters had expected.
    "The weak CPI is reducing any expectation the Bank of Canada
will be hiking (rates) any time soon - not that there was any -
but it signals the Bank of Canada will be on hold for a very
long time," said Charles St-Arnaud, economist and currency
strategist At Nomura Securities.
    Meanwhile, higher oil prices and other factors suggest room
for further loonie strength, Scotiabank's Sutton said.
    "There are a whole host of technical signals that point to
the possibility of Canadian dollar strength" in coming days, she
    The Canadian dollar, which underperformed most of
its major currency counterparts, ended the session trading at
C$1.0367 versus the U.S. dollar, or 96.46 U.S. cents, a slight
gain on Thursday's North American finish at C$1.0376, or 96.38
U.S. cents.
    The price of government debt was higher across the curve,
with the two-year bond up 2 Canadian cents to yield
1.084 percent and the benchmark 10-year bond rising
34 Canadian cents to yield 2.358 percent.