CANADA FX DEBT-C$ sheds more than half a cent on risk aversion

* C$ at C$1.0170 vs US$, or 98.33 U.S. cents
    * Germany's ZEW monthly sentiment falls short of consensus
    * Australia delays long-promised return to surplus
    * China factory output growth in April surprisingly weak
    * Bond prices fall across the curve

    By Solarina Ho
    TORONTO, May 14 (Reuters) - The Canadian dollar ended more
than half a cent weaker against its U.S. counterpart on Tuesday
as markets shied away from riskier assets following
disappointing news from China and Australia.
    China's factory output growth was surprisingly weak in
April, while fixed-asset investment also slowed, rekindling
concerns that a nascent recovery is stalling. 
    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. The
commodities-linked Australian dollar fell in reaction.
    "It started off weak on the day and just got weaker from
there. We're moving in tandem with other commodity currencies,"
said Camilla Sutton, chief currency strategist at Scotiabank.
With little news on the domestic front to drive the market, the
focus has been on broader themes, she added.
    "Overall we have a broadly stronger U.S. dollar and that
just fits into the theme we've had over the last little bit as
the market focuses on relative central bank policy and when the
(Federal Reserve) will begin to taper."
    The Canadian dollar finished its North American
session at C$1.0170 versus the greenback, or 98.33 U.S. cents.
That was more than half a cent weaker than Monday's North
American finish at C$1.0110, or 98.91 U.S. cents. It was the
currency's weakest level in a little over two weeks and its
biggest one-day move in a month.
    "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.)
    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.
    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 is 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.
    Prices of Canadian government bonds fell across the curve.
The two-year bond was off 4.7 Canadian cents to yield
1.041 percent, while the benchmark 10-year bond fell
43 Canadian cents to yield 1.959 percent.