CANADA FX DEBT-C$ dragged lower by US data, European debt

* C$ at C$0.9800 vs US$, or $1.0204

* Euro zone, US economic fears set tone

* Canada’s current account also disappointing

* Bond prices push higher across curve (Updates to afternoon)

By Claire Sibonney

TORONTO, Aug 30 (Reuters) - The Canadian dollar edged lower against its U.S. counterpart on Tuesday, taking its cue from disappointing North American economic data and nagging European debt fears.

In the euro zone, a poorly received Italian debt auction and bickering among countries about a bailout deal for Greece spurred bearish sentiment. [FRX/]

In North America, an unexpectedly large Canadian current account deficit undermined the risk-related currency, as did data that showed U.S. consumer confidence plunged in August to its lowest point in two years. [nN1E77T0QG] [nN1E77T0DO]

Data also showed U.S. single-family home prices dipped in June from May as the market continued to crawl along at depressed levels. [nN9E7H701O]

“A lot of people were thinking the Canadian dollar could be a potential safe-haven currency. Obviously that hasn’t been the case,” said Mazen Issa, Canada macro strategist at TD Securities, noting the Canadian dollar was being dragged lower by volatile U.S. equities. [.N]

“The (Canadian) dollar has been all over the place today so far, and some of this is a reflection of U.S. economic concerns and it’s also a reflection of Europe as well.”

Traders were looking ahead to the release of U.S. Federal Reserve minutes later in the afternoon for insight into the views of Fed policy dissenters and into any further description about economic stimulus tools available to the Fed following Chairman Ben Bernanke’s speech last week.

Chicago Federal Reserve President Charles Evans told CNBC television he was concerned about the economy and favored strong policy accommodation. [nN9E7H701Q]

At 12:39 p.m. (1639 GMT), the Canadian dollar stood at C$0.9800 to the U.S. dollar, or $1.0204, down from Monday’s North American session close at C$0.9771 versus the greenback, or $1.0234.

John Curran, senior vice president at CanadianForex, said support for the U.S. dollar remains at C$0.9750 and C$0.9715 while resistance comes at C$0.9790, C$0.9825 and C$0.9880.

Canadian bond yields tracked market risk appetite lower. The two-year bond CA2YT=RR was up 8 Canadian cents to yield 1.019 percent, while the 10-year bond CA10YT=RR rallied 63 Canadian cents to yield 2.389 percent.

Canadian prices underperformed their U.S. counterparts at the long end of the curve, but outperformed in the interest-rate sensitive two-year area. (Editing by Peter Galloway)