CANADA FX DEBT-C$ weaker after PQ victory, BoC in focus

* C$ at C$0.9882, vs US$, or $1.0119
    * Separatist PQ wins minority government, referendum
    * Bank of Canada expected to hold interest rate, focus on

    By Solarina Ho
    TORONTO, Sept 5 (Reuters) - Canada's dollar was weaker
against the greenback on Wednesday after the separatist Parti
Quebecois resumed power in the French-speaking province of
Quebec Tuesday evening, but market sentiment ahead of the Bank
of Canada's rate decision and a key European Central Bank
meeting overshadowed the election results.
    The Parti Quebecois edged ahead of the ruling Liberals to
win a minority government, which effectively ruled out the
possibility of another referendum to separate from Canada, but
results were eclipsed by a masked gunman who killed one person
inside the Montreal theater where the PQ was celebrating its
narrow victory. 
    "Having the PQ minority in place does bode well, have better
implications in terms of the Canadian assets, the Canadian
dollar, some of the bonds," said Mazen Issa, macro strategist
with TD Securities, adding the currency was muted following the
    "Heading into the election, (the minority result) was
already built in, that was the expectation. Now that we've
actually had that result...the Canadian dollar movement, it
probably has less to do with that than broader market
    At 7:42, the Canadian dollar stood at C$0.9882, versus the
U.S. dollar, or $1.0119, weaker than Tuesday's North American
finish at C$0.9858, or $1.0144.
    Later on Wednesday, the Bank of Canada will be announcing
its next interest rate decision. The central bank is expected to
leave interest rates unchanged, so investors will be focused on
whether Governor Mark Carney will change the bank's recent
message that interest rates need to rise.
    Canadian government bonds were mixed, with the two-year bond
 climbing half a Canadian cent to yield 1.115 percent.
The benchmark 10-year bond price was down 2 Canadian
cents, to yield 1.740.