* C$ falls 1.2 pct to lowest vs yen since Aug. 8 * C$ at C$1.0525 vs US$, or 95.01 U.S. cents * Talk of Western strike against Syria's government forces * Bond prices rise By Solarina Ho TORONTO, Aug 27 (Reuters) - The Canadian dollar traded steady against its U.S. counterpart but sagged against the Japanese yen as talk of an imminent Western strike against Syria drove investors to perceived safe haven currencies. Western powers told the Syrian opposition to expect a strike against President Bashar al-Assad's forces within days, according to sources who attended a meeting between envoys and the Syrian National Coalition in Istanbul. The move came after hundreds of civilians, including children, were killed in rebel-held suburbs of Damascus in what many suspect to be a poison gas attack. "A lot of it has been the news overnight that there's probably a military operation being prepared against Syria," said Charles St-Arnaud, economist and currency strategist with Nomura Securities in New York. "That has been causing a sell-off of a lot of what you would call the risky currencies," he added. Compared with such currencies as the yen, the Canadian dollar is considered riskier since it has a high exposure to fluctuations of its large natural resources exports, such as oil. The yen usually climbs in times of financial market stress and geopolitical uncertainty while growth-linked higher-yielding currencies are sold off. The Canadian dollar fell 1.2 percent against the yen to 93.61 yen, hitting its lowest against the Japanese currency since Aug. 8. Against the U.S. dollar, the Canadian dollar traded at $1.0508 or 95.17 U.S. cents. This was minutely softer than Monday's finish at C$1.0503, or 95.21 U.S. cents. St-Arnaud, who noted the Canadian currency's weakness despite oil prices that climbed on rising tensions over Syria, said the bulk of Tuesday's action will likely be from geopolitical tensions. The Canadian dollar traded as firm as C$1.0498 and as soft as C$1.0540. Economists are expecting an index reading of 79.0. Canadian government bond prices were higher across the curve, with the two-year bond rising 2.5 Canadian cents to yield 1.173 and the benchmark 10-year bond climbing 31 Canadian cents to 2.612 percent.