CANADA FX DEBT-C$ weakest in two weeks as Bank of Canada trims growth outlook

* Canadian dollar weakens to C$1.3137, or 76.12 U.S. cents
    * Bond prices rise further across the maturity curve after

 (Adds details, quote, updates prices)
    By Alastair Sharp and Leah Schnurr
    TORONTO/OTTAWA, Oct 21 (Reuters) - The Canadian dollar
weakened more than 1 percent against the greenback on Wednesday
after the Bank of Canada lowered its growth forecasts for 2016
and 2017, underscoring expectations the central bank is a long
way off from raising interest rates.
    The bank held its key rate steady but said growth would be
slower than previously forecast as lower prices for oil 
 and other commodities were dampening business investment
and exports in the resource sector. 
    The Canadian dollar weakened after the statement, which some
analysts characterized as more dovish, and continued to lose
ground through the day, hitting a session low in the early
afternoon as a drop in the price of oil also weighed. The day's
decline put the loonie at its weakest since Oct. 5.
    The Bank of Canada has already cut rates twice this year to
combat the hit from cheaper oil on the economy. A recent Reuters
poll showed analysts do not expect the bank to raise rates until
the first quarter of 2017. 
    "If you were of the camp that you thought maybe, just maybe,
they might do something toward the middle of next year, you've
definitely pushed that down the road now," said Amo Sahota,
director at Klarity FX in San Francisco.  
    "It looks like 2016 might be a 'sit on your hands' kind of
year as far as rate increases go."
    The Canadian dollar ended the North American
session at C$1.3137 to the greenback, or 76.12 U.S. cents, much
weaker than Tuesday's close of C$1.2982, or 77.03 U.S. cents. 
    Sahota expects to see more weakness from the Canadian dollar
as its recent rally in the first half of October had more to do
with a drop in the U.S. dollar than Canadian fundamentals.
    "Generally we think dips for U.S. dollar-Canadian dollar are
there to be bought into and we'll be heading back up to the
C$1.33, C$1.34 area," he said.
     Canadian government bond prices rose across the maturity
curve, with the two-year up 5 Canadian cents to yield
0.533 percent and the benchmark 10-year up 75
Canadian cents to yield 1.458 percent.

 (Editing by James Dalgleish)