CANADA FX DEBT-C$ hits weakest close in six years on US$ rally

(Updates with fresh details, comments and closing figures)
    * Canadian dollar at C$1.2761, or 78.36 U.S. cents
    * Bond prices higher across the maturity curve

    By Solarina Ho
    TORONTO, March 11 (Reuters) - The Canadian dollar slumped to
its weakest finish in six years against its U.S. counterpart on
Wednesday, as a rallying greenback and slumping crude prices
weighed on the currency.
    The U.S. dollar surged to a 12-year high against a basket of
major currencies amid expectations the U.S. Federal
Reserve will begin hiking interest rates in the coming months
and after the European Central Bank began buying sovereign bonds
on Monday to try and boost growth and inflation in the region.
    "It's still a game of U.S. dollar strength ... that Fed hike
is still months away," Benjamin Reitzes, senior economist and
foreign exchange strategist at BMO Capital Markets. "It's going
to be a tough environment for pretty much every currency against
the U.S. dollar."
    The Canadian dollar ended the session at C$1.2761
to the U.S. dollar, or 78.36 U.S. cents, weaker than Tuesday's
Bank of Canada finish of C$1.2680, or 78.86 U.S. cents. It
touched C$1.28 at one point during the session, matching levels
hit at the end of January, and saw the softest close since March
12, 2009.
    Brent crude rebounded from one-month lows while U.S. prices
ended the session slightly lower on record inventory levels in
the United States. 
    The widening difference between Brent and U.S. prices is
particularly painful for oil-exporting Canada, said Reitzes,
noting that gasoline prices in the country are typically priced
off Brent crude, while oil exports are priced off West Texas
Intermediate or Western Canadian Select.
    "It's going to be tough for the Canadian dollar to make any
headway ... The widening spread between Brent and WTI is a
pretty sizeable negative," Reitzes added.
    Investor are awaiting Friday's Canadian employment data for
February for further direction. The forecast shows an expected
5,000-job decline, and Jack Spitz, managing director of foreign
exchange at National Bank Financial, said a worse-than-expected
figure could send the loonie well past C$1.28, toward C$1.30.
    Canadian government bond prices were higher across the
maturity curve, with the two-year up 1 Canadian cent
to yield 0.583 percent and the benchmark 10-year up
36 Canadian cents to yield 1.497 percent.

 (Reporting by Solarina Ho; Editing by Lisa Von Ahn and Meredith