* Canadian dollar falls 0.6 percent vs greenback
* Bond prices mixed after rallying earlier
* Bank of Canada cuts rate 50 basis points to 2.5 pct
TORONTO, Oct 8 (Reuters) - The Canadian dollar fell against a generally stronger U.S. dollar on Wednesday as broader economic worries overshadowed the Bank of Canada's concerted action with other central banks to slash interest rates in an attempt to shore up confidence in financial markets.
Bond prices were mixed, benefiting from worries over the health of the global economy, but pressured by some shifting of assets to stock markets.
Shortly before 10:30 a.m. (1430 GMT), the Canadian dollar was at C$1.1143 to the U.S. dollar, or 89.74 cents, down from C$1.1073 to the U.S. dollar, or 90.31 cents, at Tuesday's close.
The currency was 0.6 percent lower against its U.S. counterpart as concerns over the spreading credit crisis continued to weigh, driving down commodity prices as investors braced for lower demand amid a potential global recession.
Canada is a major exporter of oil and other commodities.
The greenback has been in high demand due to tight liquidity and its status as a safe-haven asset.
The Bank of Canada, along with central banks around the world including the U.S. Federal Reserve and the Bank of England, cut its key lending rate on Wednesday in an attempt to help shore up investor confidence.
"It sort of helps relieve the fears in the markets," said David Watt, senior currency strategist at RBC Capital Markets
"It is it going to be the panacea that gets us through the crisis? No. But at least it helps break what was turning into a very dark psychological development in markets where they were just running away from fears."
The rate cut, which brings the bank's key rate down by 50 basis points to 2.50 percent, comes ahead of its scheduled interest rate announcement on Oct. 21. [ID:nN08492471]
The bleak global outlook has undercut support for commodities, which make up around half of Canada's exports.
"The Canadian dollar is going to weaken," said Watt. "The global economy is potentially going into a recession and that is not a good backdrop for Canadian terms of trade or oil prices. It's just whether or not we're going to weaken off sharply or weaken off at a relatively modest pace."
BOND PRICES MIXED
Canadian bond prices were mixed, rallying initially on safe-haven concerns, but then easing as stock markets turned positive.
Analysts said the Bank of Canada may not be done cutting rates, which could put further upward pressure on bond prices.
"We still have a (scheduled) Bank of Canada meeting in October and it does raise the prospect that they'll cut again and we think they will, by another 50 basis points," said Michael Gregory, senior economist at BMO Capital Markets.
The yield on the two-year bond, with most closely reflects market expectations of future interest rate levels, touched its lowest point in decades, below 2.1 percent.
The coordinated rate cuts were part of a multi-pronged approach to unclog the credit creation process globally, but the market expects that more will be done.
"At the margin, this will help, but whether this is a panacea, no way. No way," said Gregory.
"I think from an economic standpoint, or a volatility standpoint, there's probably more of a rough ride ahead before things start to stabilize."
The Canadian overnight Libor rate LIBOR01 was 3.975 percent, up from 3.842 percent on Tuesday.
Tuesday's CORRA rate CORRA= was 2.9954 percent, up from 2.9226 percent on Monday. The Bank of Canada publishes the previous day's rate at around 9 a.m. daily.
The two-year bond jumped 25 Canadian cents to C$101.24 to yield 2.164 percent. The 10-year bond slipped 15 Canadian cents to C$105.83 to yield 3.530 percent.
The yield spread between the two-year and the 10-year bond rose to 134 basis points from 123.6 basis points at the previous close.
The 30-year bond eased 10 Canadian cents to C$115.50 to yield 4.077 percent. In the United States, the 30-year Treasury yielded 3.993 percent.
The three-month when-issued T-bill yielded 1.55 percent, down from 1.6 percent at previous close. (Reporting by John McCrank and Jennifer Kwan; Editing by Peter Galloway)