CANADA FX DEBT-C$ stumbles, greenback climbs after North American data

* Canadian dollar at C$1.2277, or 81.45 U.S. cents
    * Bond prices mostly lower across the maturity curve

    By Solarina Ho
    TORONTO, May 22 (Reuters) - The Canadian dollar sagged on
Friday to its weakest in a month following North American
economic data that lifted the greenback to more than three-week
highs against a basket of currencies.
    In Canada, retail sales rose for a second straight month in
March, climbing 0.7 percent and topping expectations for a
modest gain of 0.3 percent. Volumes only increased 0.1 percent,
    Meanwhile, inflation fell short of economists' forecasts and
the Bank of Canada's 1 to 3 percent target range, cooling to 0.8
percent in April, its smallest increase since October 2013. The
data reflected the central bank's expectations that soft energy
prices would put a temporary damper on the economy.
    "This is truly a balanced set of data from their
perspective, which will leave them still on the sidelines," said
David Tulk, chief Canada macro strategist at TD Securities.
    The U.S. dollar rallied after data showed consumer prices
moderated in April due to weak gasoline prices, but rising
shelter and medical care costs gave underlying inflation
pressures a boost, which supported views the Federal Reserve is
on track to hike interest rates later this year. 
    "(Canada) is outperforming on the bond market, but
underperforming on the currency market," said Benjamin Reitzes,
senior economist at BMO Capital Markets.
    "That's to be expected when you get that elevated core print
in the U.S. and a little bit weaker in Canada, but close to
    At 9:31 a.m. EDT (1331 GMT), the Canadian dollar 
was trading at C$1.2277 to the greenback, or 81.45 U.S. cents,
sharply weaker than the Bank of Canada's official close of
C$1.2208, or 81.91 U.S. cents on Thursday.
    Following the data, the currency touched C$1.2294, its
weakest since April 21, after trading as strong as C$1.2197
earlier in the session.
    A fall in crude prices also added to pressure on the loonie.
    U.S. crude was down 2.03 percent to $59.49, while
Brent crude lost 1.97 percent to $65.23. 
    Canadian government bond prices were mostly lower across the
maturity curve, with the two-year price down 2.5
Canadian cents to yield 0.68 percent and the benchmark 10-year
 falling 14 Canadian cents to yield 1.763 percent.
    The Canada-U.S. two-year bond spread was 6.2 basis points,
while the 10-year spread was -44.6 basis points.

 (Additional reporting by John Tilak; Editing by Bernadette