* Canadian dollar slides 0.5 percent versus greenback
* Focus on data to be released on Friday
* Bonds fall as equities rally undermines safe-haven bid
By John McCrank and Jennifer Kwan
TORONTO, Oct 9 (Reuters) - The Canadian dollar fell to its lowest point since mid-April 2007 against the U.S. dollar on Thursday as investors positioned themselves ahead of a big day for Canadian economic data on Friday.
Bond prices were lower as a rally in the stock markets undermined the safe-haven bid for government debt.
At 9:58 a.m. (1358 GMT), the Canadian dollar was down 0.5 percent against the U.S. dollar at C$1.1288, or 88.59 cents, down from C$1.1229 to the U.S. dollar, or 89.06 cents, at Wednesday's close.
The currency has been on a downtrend for the past fortnight, falling 4.2 percent so far this week, after dropping 4.5 percent the previous week -- its biggest weekly loss since at least 1970.
As the U.S. economy flirts with recession and the global economy stumbles, the Canadian dollar has been hit hard as Canada's prospects for growth are seen dwindling.
The United States absorbs three-quarters of Canada's exports. Around half of Canadian exports are commodities, the prices of which are falling with demand as economies shrink.
"Everyone is just looking forward to tomorrow, when we do get a huge amount of Canadian data," said Jacqui Douglas, currency strategist at TD Securities.
Data on Friday include a jobs report for September, international merchandise trade data for August, the new housing price index for August, and the Bank of Canada's Business Outlook Survey and Senior Loan Officer Survey.
"I think that we are going to see weakening in most of the major indicators," Douglas said.
Employment has slowed markedly in Canada since the furious pace of job growth last year and the trade balance is expected to deteriorate now that commodity prices have softened.
"And I think the most important thing for the Bank of Canada for interest rates in Canada is the Business Outlook Survey that is coming out tomorrow," said Douglas. "I think we are going to see some serious softening there compared to the last one."
The Bank of Canada, along other major central banks around the world, cut its key lending rate on Wednesday in an attempt to help shore up investor confidence and get credit flowing.
The surprise rate cut, which brings the bank's key rate down by 50 basis points to 2.50 percent, came ahead of its scheduled interest rate announcement on Oct. 21. See [ID:nN08492471]
BOND PRICES FALL
Bond prices were lower as investors moved cash into stock markets.
Sal Guatieri, senior economist at BMO Capital Markets, said that bond prices, while currently down, could be due for some healthy gains on Friday if data points to a softening Canadian economy.
"We're looking for a significant decline in the trade surplus because of plunging exports, and now a pullback in commodity prices, so that... may support the bond market because it will fit into the fear now that Canada's economy is at risk because of the downturn in both exports and commodity prices," he said.
In times of economic uncertainty, investors often seek the relative safety of government debt.
The Canadian overnight Libor rate LIBOR01 was 3.733 percent, down from 3.975 percent on Wednesday.
Wednesday's CORRA rate CORRA= was 2.489 percent, down from 2.923 percent on Tuesday. The Bank of Canada publishes the previous day's rate at around 9 a.m. daily.
The two-year bond fell 15 Canadian cents to C$101.07 to yield 2.233 percent. The 10-year bond slipped 63 Canadian cents to C$104.75 to yield 3.659 percent.
The yield spread between the two-year and the 10-year bond rose to 127 basis points from 133 basis points at the previous close.
The 30-year bond dropped 20 Canadian cents to C$114.20 to yield 4.147 percent. In the United States, the 30-year Treasury yielded 4.066 percent.
The three-month when-issued T-bill yielded 1.55 percent unchanged from the previous close. (Editing by Peter Galloway)