* C$ slides to 98.63 U.S. cents
* Canadian bond prices flat to higher (Updates to midday)
TORONTO, Dec 17 (Reuters) - The Canadian dollar fell further against the U.S. currency on Friday to hit a two-week low as investors shifted their focus to the troubles in the euro zone, which spurred a flight to safety to the U.S. dollar.
Canada's currency fell as low as C$1.0147 to the U.S. dollar, or 98.55 U.S. cents, its lowest point since Dec. 2, as the euro came under pressure after Moody's Investors Service slashed Ireland's credit rating by five notches.
The credit rating agency also warned that further downgrades could follow if Ireland is unable to stabilize its debt situation.
"It's been more of a volatile day than has typically been the case recently, but a lot of that has been a couple of brief spikes and the bias around the intraday trading has been pretty restrained," said Sacha Tihanyi, currency strategist at Scotia Capital.
"It's essentially a U.S. dollar strength kind of day. It seems like the positive news about the euro has worn off fairly quickly."
At 12:15 p.m. (1715 GMT), the Canadian dollarwas at C$1.0139 to the U.S. dollar, or 98.63 U.S. cents, down sharply from its Thursday's finish of C$1.0059 to the U.S. dollar, or 99.41 U.S. cents.
Canadian bonds were flat to higher across the curve, partly tracking prices of U.S. Treasuries, which climbed in part as the Irish credit rating downgrade supported flow to safe-haven debt. [US/]
Weakening stock markets also helped the less risky government bond market attract investors.
The interest-rate sensitive two-year bondedged 6 Canadian cents higher to yield 1.647 percent, while the 10-year bond climbed 33 Canadian cents to yield 3.216 percent. (Reporting by Ka Yan Ng; editing by Peter Galloway)
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