* C$ weaker at C$1.0184 vs US$, or 98.19 U.S. cents
* Bond prices edge lower across the curve
By Claire Sibonney
TORONTO, July 24 (Reuters) - The Canadian dollar slipped
against the greenback for a third straight session on Tuesday
after signs of improvement in China's economy were offset by a
report showing Europe's debt crisis had caused a sharp slowdown
in German factory activity.
Data also showed the private sector across the whole
17-nation euro area shrank for a sixth straight month in July,
mainly due to the weakness in manufacturing, putting the region
on track to fall back into recession.
The slowdown in German industrial activity was the biggest
surprise for market analysts, contracting in July at its fastest
pace in three years.
"Europe continues to dominate the market's focus here," said
Matt Perrier, director of foreign exchange sales at BMO Capital
Markets.
Meanwhile, Spain paid the second highest yield on short-term
debt since the birth of the euro at a debt auction, reflecting a
growing belief that the country will need a full sovereign
bailout that the euro zone can barely afford.
Risk assets were less affected by data that showed China's
manufacturing output in July grew at its fastest pace in nine
months, easing fears of a sharp slowdown in the world's No. 2
economy.
"It's a bit of good news after some disappointing numbers
out of China but one number doesn't a trend make so I think the
market is more clearly focused on Europe at this point and
concerns over spreads and everything else that's going on
there."
At 8 a.m. (1200 GMT), the Canadian dollar was at
C$1.0184 versus its U.S. counterpart, or 98.19 U.S. cents, down
from Monday's North American session close at C$1.0168 to the
greenback, or 98.35 U.S. cents.
Markets will look to Canadian retail sales data for May due
at 8:30 a.m. for further direction.
Perrier said there was some near-term support for the
Canadian dollar around its July 12 low of C$1.0251, and
resistance around C$1.0165 to C$1.0135.
Canadian bond prices also drifted lower, underperforming
U.S. Treasuries.
The two-year government bond fell 3 Canadian
cents to yield 0.944 percent and the benchmark 10-year bond
lost 20 Canadian cents to yield 1.604 percent.