CANADA FX DEBT-C$ notches gain; EU summit in focus

* Currency up at C$1.0275 to the dlr or 97.32 U.S. cents
    * Global markets little changed ahead of EU summit
    * Bonds edge lower across curve

    By Jennifer Kwan
    TORONTO, June 26 (Reuters) - Canada's dollar edged slightly
higher against its U.S. counterpart on Tuesday while global
markets were little changed as investors were hesitant to make
major bets ahead of a European summit later this week.
    The move tracked global equities where apprehension over the
outcome of this week's crucial summit left the euro near a
two-week low, but European shares managed a slight uptick after
three days of losses. 
    "I would characterize the market in general as subdued and
mostly sideways. Fairly light liquidity-wise ahead of the event
risk this week, which is clearly the EU summit," said Jack
Spitz, managing director of foreign exchange at National Bank
    The two-day summit in Brussels on Thursday and Friday will
be the 20th time European Union leaders have met on resolving a
crisis that has spread across the euro zone since it began in
Greece in early 2010.
    At 8:08 a.m. (1208 GMT), the Canadian currency was
at C$1.0275 to the greenback, or 97.32 U.S. cents, up from 
Canadian currency Monday's finish at C$1.0292 to the
greenback, or 97.16 U.S. cents.
    A spike in Spain's short-term borrowing costs capped gains.
Costs nearly tripled at auction on Tuesday, underlining the
country's precarious finances as it struggles against recession
and juggles with a debt crisis among its newly downgraded banks.
    The formal request from Spain for European funds and Moody's
mass downgrade of 28 of its banks, as well as news that Cyprus
had become the fifth euro zone nation to request a bailout, kept
the appetite for riskier assets relatively low. 
    Spitz said investors will await economic data on Tuesday
including the S&P Case/Shiller Home Price Index for April and
consumer confidence data for further direction, but the real
market focus will be the outcome of the EU summit later in the
    Heading into that event, Spitz said he expects the currency
to trade in a range of C$1.02 to C$1.03 versus the greenback.
    Canadian bonds were slightly lower with the two-year
Canadian government bond down 1 Canadian cents to
yield 1.0 percent, while the benchmark 10-year bond 
was lower by 8 Canadian cents to yield 1.737 percent. The
30-year bond yielded 2.307.