CANADA FX DEBT-C$ slips as Europe worries grip markets

* Currency lower at 97.04 U.S. cents
    * C$ touches lowest since June 12
    * Bonds climb as investors shun risk

    By Jennifer Kwan
    TORONTO, June 25 (Reuters) - The Canadian dollar slipped
against its U.S. counterpart on Monday as equity markets
faltered on investor worries that policymakers at a European
summit this week would make little progress in solving the
region's debt crisis.
    The euro weakened, equities hit a one-week low and Spanish
borrowing costs climbed ahead of the June 28-29 summit.
Investors are worried policymakers will not do enough to prevent
Spain and Italy from being sucked further into a debt crisis
that has already forced Greece, Portugal and Ireland to seek
international bailouts. 
    "The markets are starting the week on a sour note all
relating to Europe," said Blake Jespersen, a managing director
foreign exchange sales at BMO Capital Markets.
    At around 9:05 a.m. (1305 GMT), the Canadian currency
 was at C$1.0305 to the greenback, or 97.04 U.S. cents.
Earlier, it touched C$1.0310, its weakest against the greenback
since June 12.
    The currency finished its North American session on Friday
at C$1.0246 to the greenback, or 97.60 U.S. cents.
    Investors were also cautious as Spain formally requested
euro zone rescue loans on Monday to recapitalise banks that are
laden with bad debts. Analysts say the euro zone's fourth
largest economy, which has become the focus of the debt crisis,
will struggle to get out of recession unless the banking
problems are solved. 
    The Canadian currency largely underperformed most of its
major currency peers including the New Zealand and Australian
    Jespersen said Canada's dollar would likely trade a range of
C$1.0250-C$1.04 in the near term.
     "There's no real Canadian data on the calendar until Friday
so the Canadian dollar is going to take its cues from what's
going on in Europe and the overall theme in the market. So
expect that to be quite negative this week," he said.
    Markets will await domestic growth data for April, as well
as industrial product and raw materials price data. 
    Canadian bonds mirrored moves in U.S. Treasuries, which were
higher in Europe on uncertainty about the EU summit later in the
    The two-year Canadian government bond rose 10
Canadian cents to yield 1.018 percent, while the benchmark
10-year bond was up 83 Canadian cents to yield 1.721