CANADA FX DEBT-C$ slips as oil drops, focus on Europe

 * C$ ticks lower at 99.25 U.S. cents

 * Canadian bond prices flat to higher

 TORONTO, Dec 17 (Reuters) - The Canadian dollar slipped
against its U.S. counterpart on Friday morning, under pressure
from weaker commodity prices and investors, who shifted their
focus to the euro zone.

 Oil, a key Canadian export, dropped below $88 a barrel,
while base metals prices were largely steady but looked to
China demand for more direction. [O/R] [MET/L]

 David Watt, senior fixed income and currency strategist at
RBC Capital Markets, said commodity currencies have generally
been underperforming overnight.

 "It's not necessarily an indicator of a risk-off
environment because equity markets overall overnight were
rather flattish," he said.

 "It just seems markets were more interested in other
currencies today, especially some of the European block
currencies."

 He added investors were largely uncertain about the impact
China's tightening regime would have on base metals.

 "In commodity currencies you need a reason to buy them and
there's not really a reason to buy them right now," he said.

 Upbeat German data helped the euro overcome a sharp credit
ratings downgrade for Ireland on Friday, although investors
were wary about pushing it higher while worries persist about
peripheral euro zone debt. [FRX/] [ID:nLDE6BF2A3]

 "You look at the German data and it's just going
gangbusters. It seems the worse the news is on the EU periphery
the stronger the German economy is," said Watt.

 At 8:15 a.m. (1315 GMT), the Canadian dollar CAD=D4 was
at C$1.0076 to the U.S. dollar, or 99.25 U.S. cents, down from
its Thursday's finish at C$1.0059 to the U.S. dollar, or 99.41
U.S. cents.

 Watt said he is eyeing tight technical ranges of C$1.01 to
the U.S. dollar, or 99.01 U.S. cents, and parity with the U.S.
dollar.

 Bonds were flat to higher across the curve, partly tracking
U.S. Treasuries where debt prices climbed in part as the Irish
credit rating downgrade supported flow to safe-haven debt.
[US/]

 The interest-rate sensitive two-year bond CA2YT=RR edged
4 Canadian cents higher to yield 1.657 percent, while the
10-year bond CA10YT=RR climbed 18 Canadian cents to yield
3.234 percent.
 (Reporting by Jennifer Kwan; Editing by Theodore d'Afflisio)