CANADA FX DEBT-Canadian dollar eases as oil pressures, bonds up

 * Canadian dollar eases as oil price pressures

 * Bonds rise as central banks in focus

 * Political uncertainty in Ottawa grows

 TORONTO, Dec 4 (Reuters) - The Canadian dollar slipped
against the U.S. dollar on Thursday in a backdrop of weakening
oil prices, political uncertainty and risk aversion.

 Rate cuts by central banks around the world and fears of
recession put new life into the allure of safe-haven government
bonds.

 At 7:35 a.m., the Canadian dollar was at C$1.2614 to the
U.S. dollar, or 79.28 U.S. cents, down from C$1.2535 to the
U.S. dollar, or 79.78 U.S. cents, at Wednesday's close.

 There was little initial reaction to the Bank of England's
100 basis point rate cut, which met market expectations.

 "It wasn't really anything shockingly surprising in that
respect. If anything we've seen a bounce higher in sterling
after the fact. I think that's prevented a significant move to
the topside in dollar/Canada," said George Davis, chief       
technical analyst at RBC Capital Markets.

 "At the same time crude oil prices are still weaker."

 The general theme of risk aversion -- which makes the U.S.
dollar the "path of least resistance" -- is prevalent and
weighing on the Canadian currency, he added.

 The price of oil was off 2 percent below $46 [ID:nSP68559],
putting pressure on the Canadian dollar. Canada is a major oil
producer and exporter and its currency is often influenced by
oil price moves.

 A growing political crisis in Ottawa has also been in the
background, though analysts are mixed on its impact on the
Canadian dollar in the midst of the turmoil.

 Canadian Prime Minister Stephen Harper is expected on
Thursday to take the unprecedented step of seeking the
suspension of Parliament so he can avoid defeat at the hands of
the opposition. [ID:nN04373121]

 BONDS RISE

 Bond prices were higher across the board as a safe-haven
bid was revived in the wake of massive rate cuts by central
banks to shore up crumbling economies that appear headed for a
deep recession.

 The Bank of England slashed rates 100 basis points to 2.0
percent, the lowest level since 1951. [ID:nTAR005422] That cut
followed Sweden's record 175 basis point cut, and New Zealand's
150 basis point reduction. Market attention will now turn to
the European Central Bank's rate decision.

 Meanwhile, market players were also preparing for the
Canadian employment data for November on Friday, which is the
last piece of major data before the Bank of Canada makes its
next interest rate announcement on Dec. 9. U.S. employment
figures, due Friday, are also in focus.

 The two-year bond rose 1 Canadian cents to C$102.25 to
yield 1.592 percent. The 10-year bond gained 42 Canadian cents
to C$109.37 to yield 3.101 percent.

 The yield spread between the two-year and 10-year bond was
158 basis points, up from 157 at the previous close.

 The 30-year bond advanced 90 Canadian cents to C$121.80 to
yield 3.748 percent. In the United States, the 30-year treasury
yielded 3.0972 percent.
 (Reporting by Ka Yan Ng, Editing by Chizu Nomiyama)