CANADA FX DEBT-C$ briefly breaks C$1.12 on disappointing data

* Canadian dollar at C$1.1179 or 89.45 U.S. cents
    * Bond prices mostly lower across the maturity curve

    By Leah Schnurr
    TORONTO, Sept 30 (Reuters) - The Canadian dollar weakened to
a more than six-month low against the greenback on Tuesday,
briefly piercing resistance at C$1.12 after data showed growth
in Canada's economy stalled in July.
    The loonie is down nearly 3 percent for the month, putting
it on track for its worst month since January when it was caught
in a sharp selloff. 
    For the quarter, the currency has fared even worse and is
down 4.6 percent, the biggest decline since the third quarter of
    A big driver behind the loonie's decline over the last three
months has been broad-based buying of the U.S. dollar as the
economy south of the border has picked up and the Federal
Reserve moves closer to ending its extraordinary stimulus.
    At the same time, there has been the growing view that the
Bank of Canada will stay on the sidelines longer than the Fed as
economic growth in Canada has been lackluster.
    Further evidence of a sluggish economy was Tuesday's
catalyst for a weaker loonie after data showed Canada's economy
did not expand in July. 
    "With a bare (economic) calendar, a lot of things were
riding on this number in terms of whether we confirm that we're
moving higher or if we have a bit of a pullback," said Don
Mikolich, executive director of foreign exchange sales at CIBC
World Markets in Toronto.
    "It's another question mark about the strength of the
recovery here."
    The Canadian dollar was at C$1.1179 to the
greenback, or 89.45 U.S. cents, weaker than Monday's close of
C$1.1153, or 89.66 U.S. cents.
    The loonie high a session low of C$1.1205, its lowest level
since late March.
    With the currency breaking through that threshold, it could
open up some room to the C$1.1250 level, although the loonie
could run out of steam beyond C$1.12 depending on the data, said
    Investors were also taking in a separate report that showed
producer prices edged up 0.2 percent in August. The domestic
economic calendar is light through the rest of the week until
trade balance figures due on Friday. 
    Canadian government bond prices were mostly lower across the
maturity curve, with the two-year off 1.1 Canadian
cents to yield 1.125 percent and the benchmark 10-year
 down 15 Canadian cents to yield 2.142 percent.

 (Editing by Nick Zieminski)