CANADA FX DEBT-C$ weakens, retaining defensive bias as economy stalls

    * Canadian dollar at C$1.3653, or 73.24 U.S. cents
    * Bond prices slightly lower across the yield curve

    By Fergal Smith
    TORONTO, April 28 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Friday, retaining this week's
defensive bias as domestic data showed the economy stalled in
February, offsetting a rebound in oil prices.
    Canadian gross domestic product was flat in February,
matching the forecast by analysts in a Reuters poll, after
robust growth in January.             
    "It is a soft month in an otherwise solid quarter," said
Derek Holt, head of capital markets economics at Scotiabank.
    Oil prices rose after dropping to a one-month low the
previous day, prompting investors to buy at cheaper levels ahead
of a May Organization of the Petroleum Exporting Countries
meeting at which producers could extend output cuts.
    At 9:01 a.m. ET (1301 GMT), the Canadian dollar          was
trading at C$1.3653 to the greenback, or 73.24 U.S. cents,
weaker than Thursday's close of C$1.3624, or 73.40 U.S. cents.
    The currency traded in a range of C$1.3625 to C$1.3666.
    On Thursday, the loonie touched a fresh 14-month low at
C$1.3670. It is on course to fall 1.1 percent this week,
pressured by recent weakening in oil prices and a more uncertain
outlook for the North American Free Trade Agreement.
    Canadian government bond prices were slightly lower across
the yield curve in sympathy with U.S. Treasuries. The two-year
           dipped 1.5 Canadian cents to yield 0.742 percent and
the 10-year             declined 5.2 Canadian cents to yield
1.581 percent.
    On Thursday, the 10-year yield touched a three-week high at
1.621 percent.

 (Reporting by Fergal Smith; Editing by Nick Zieminski)