CANADA FX DEBT-C$ flat as Europe stress, retail sales tug

* C$ ticks up at C$1.0165 vs US$, or 98.38 U.S. cents
    * Retail sales weaker than expected; ex-autos stronger
    * Global stocks lower on European factory slowdown
    * Bond prices edge lower across the curve

    By Jennifer Kwan
    TORONTO, July 24 (Reuters) - Canada's dollar was little
changed against its U.S. counterpart on Tuesday as bright spots
contained in a domestic retail sales report were offset by data
showing Europe's debt crisis had caused a sharp slowdown in
German factory activity.
    Canadian retail sales grew by a weaker-than-expected 0.3
percent in May, not enough to make up for the previous month's
decline and further proof of lackluster growth in the second
quarter, according to Statistics Canada data. But excluding
autos, the data came in stronger than expected. 
    "It was a decent number for Canada, but in the grand scheme
of things it's going to get lost in translation," John Curran,
senior vice president at CanadianForex, said of the retail sales
    "It's a positive number. But any good news that stems from
that will eventually be negated by the European situation."
    At around 9:00 a.m. (1300 GMT), the Canadian dollar 
was at C$1.0165 versus its U.S. counterpart, or 98.38 U.S.
cents, up slightly from Monday's North American session close at
C$1.0168 to the greenback, or 98.35 U.S. cents.
    Global factors weighed on the currency, strategists said.
Data showed the private sector across the whole 17-nation euro
area shrank for a sixth straight month in July, mainly due to
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
    Meanwhile, Spain paid the second-highest yield on short-term
debt since the 1999 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 drew some support from 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
    "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
    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, mostly
underperforming U.S. Treasuries. 
    The two-year government bond fell 5 Canadian
cents to yield 0.954 percent and the benchmark 10-year bond
 lost 42 Canadian cents to yield 1.627 percent.