CANADA FX DEBT-C$ weakens to 2-week low on risk aversion

* C$ at C$1.0161 vs US$, or 98.42 U.S. cents
    * Germany's ZEW monthly sentiment falls short of consensus
    * Australia delays long-promised return to surplus
    * Bond prices rise across the curve

    By Solarina Ho
    TORONTO, May 14 (Reuters) - The Canadian dollar was half a
cent weaker against the U.S. dollar on Tuesday as markets shied
away from riskier assets following weaker-than-forecast German
sentiment data and dovish comments out of Australia.
    Germany's ZEW monthly sentiment survey rose to 36.4 points
in May, from 36.3 in April, falling short of the consensus
forecast as uncertainty continues to weigh on Europe.
    Australia's struggling Labor government used the last budget
before national elections to delay a long-promised return to
surplus, blaming a stubbornly high Australian dollar and lower
commodity prices for a dramatic fall in revenues.
    "There seems to be a little bit of risk aversion going
through the market," said Matt Perrier, a director of foreign
exchange sales at BMO Capital Markets.
    "Weaker ZEW, some dovish Aussie comments, political jitters
in the UK - everything's lending a bid tone to the (U.S.)
    At 9:26 a.m. (1326 GMT), the Canadian dollar was
trading at C$1.0161 versus the greenback, or 98.42 U.S. cents.
This was about half a cent weaker than Monday's North American
finish at C$1.0110, or 98.91 U.S. cents and its weakest level in
a little over two weeks.
    In Britain, ruling Conservatives will unveil a draft bill
that could make legally binding Prime Minister David Cameron's
promise of a referendum on Britain's European Union membership.
It's a political gamble that could decide Britain's geopolitical
and economic destiny for decades ahead. 
    The Canadian dollar was underperforming against most of its
major counterparts. Perrier said the Canadian dollar could
weaken to the C$1.0190 level for the session.
    Prices for Canadian government bonds were slightly higher
across the curve. The two-year bond gained 0.6
Canadian cents to yield 1.014 percent, while the benchmark
10-year bond added 3 Canadian cents to yield 1.907