CANADA FX DEBT-Loonie softens as Ukraine, Gaza crises cut risk appetite

* Canadian dollar at C$1.0744 or 93.08 U.S. cents
    * Bond prices mostly higher across maturity curve

    By Leah Schnurr
    TORONTO, July 21 (Reuters) - The Canadian dollar weakened
modestly against the greenback on Monday, hurt by a lack of risk
appetite in global markets as fighting flared in Ukraine and
hostilities continued in Gaza.
    With the Bank of Canada sticking to its neutral policy
stance and with little domestic economic data on tap, the loonie
was expected to trade in a range, but market focus was on the
hot spots around the world.
    In Ukraine, fighting broke out in the eastern city of
Donetsk while international investigators arrived to inspect the
bodies of the victims of last week's downed Malaysian flight.
    Meanwhile, the death toll from the two-week conflict between
Israeli forces and Palestinian militants passed 500 as Israeli
jets, tanks and artillery continued to pound the Gaza Strip.
    "The economic calendar is pretty sparse today, so the focus
for financial markets in general is going to be mainly on the
Ukraine and Gaza geopolitical tensions," said Scott Smith,
senior market analyst at Cambridge Mercantile Group in Calgary.
    "With those not subsiding over the weekend and early today
at all, we're seeing a pretty broad-based risk-off feel to the
markets this morning."
    The Canadian dollar was at C$1.0744 to the
greenback, or 93.08 U.S. cents, slightly weaker than Friday's
close of C$1.0736, or 93.14 U.S. cents.
    In a relatively subdued week, Wednesday's Canadian retail
sales data for May will be a focal point, as will Tuesday's
inflation data out of the United States.  
    The U.S. dollar-Canadian dollar pairing is likely to be
tightly capped between C$1.08 and C$1.07, but a breakout above
C$1.08 could become the start of another leg higher, Smith said.
    That could see the pairing creep up to the mid-C$1.09s, he
    Canadian government bond prices were mostly higher across
the maturity curve, though the two-year was off half
a Canadian cent to yield 1.083 percent. The benchmark 10-year
 was up 17 Canadian cents to yield 2.147 percent.

 (Editing by Peter Galloway)