CANADA FX DEBT-C$ weakens modestly after China data

* Canadian dollar at C$1.1213 or 89.18 U.S. cents
    * Bond prices mostly lower across the maturity curve

    By Leah Schnurr
    TORONTO, March 24 (Reuters) - The Canadian dollar weakened
modestly against the greenback on Monday after data showed
manufacturing activity in China contracted in the first quarter,
underscoring market concerns about slower growth in the world's
second-largest economy.
    An index of manufacturing in China fell to an eight-month
low in March. The index has shown contraction since January amid
a string of other weak economic indicators from China this year.
    The Canadian dollar is sensitive to economic developments in
China, which is a major consumer of natural resources.
    "Any signs of a slowdown has the market concerned, both on
the commodity demand side of things, plus it ratchets down
global growth projections," said Don Mikolich, executive
director of foreign exchange sales at CIBC World Markets in
    The Canadian dollar was at C$1.1213 to the
greenback, or 89.18 U.S. cents, slightly weaker than Friday's
close of C$1.1210, or 89.21 U.S. cents.
    A lack of domestic economic data this week will leave
investors focused on bigger-picture themes, as well as U.S.
data, Mikolich said. 
    He added that while the C$1.1250 to C$1.13 area will be the
next psychologically important level to watch for, there may not
be any domestic factors this week that would push the loonie to
those lows.
    More dovish-than-expected comments from Bank of Canada
Governor Stephen Poloz hit the Canadian dollar last week in
combination with U.S. Federal Reserve musings about a
potentially faster timetable for eventually raising interest
    Bank of Canada Deputy Governor Tim Lane is on tap to speak
later on Monday. While the topic of his speech is expected to
focus on the financial system, investors will watch to see if he
sheds any light on the path of monetary policy.
    Canadian government bond prices were mostly lower across the
maturity curve, with the two-year off 1-1/2 Canadian
cents to yield 1.080 percent and the benchmark 10-year
 down 7 Canadian cents to yield 2.494 percent.

 (Editing by Peter Galloway)