* C$ at C$1.0224 vs US$, or 97.81 U.S. cents
* Strong Canadian manufacturing data boosts C$ briefly
* C$ also gets lift from U.S. October retail sales data
* Bond prices higher across the curve
By Jennifer Kwan
TORONTO, Nov 15 (Reuters) - The Canadian dollar sank against the greenback on Tuesday as rising euro zone bond yields highlighted the troubles facing policymakers in resolving the region's debt crisis.
But the currency's fall was cushioned by strong domestic data that showed manufacturing sales rose twice as fast as expected in September to the highest level since October 2008, sealing expectations for robust third-quarter economic growth. [ID:nN1E7AE09Q]
The currency also got a brief lift from U.S. data that showed retail sales rose more than expected in October. [ID:nCAT005552]
"The data was markedly better across the board," said Firas Askari, head of foreign exchange trading at BMO Capital Markets.
"It seems to be a market shift in sentiment," he added of the Canadian dollar's bounce. "The market is looking for any good news. There is a lot of bad news priced into this market."
At 9:00 a.m., (1400 GMT), the Canadian dollar CAD=D3 was at C$1.0224 versus the greenback, or 97.81 cents, after briefly popping up to around the C$1.0208 level following the data.
On Monday, the currency finished at C$1.0169 versus the greenback, or 98.34 cents U.S.
Despite the brief reprieve, Askari said there's still "a large amount of pessimism" in the global markets.
Top-rated European nations came under increasing pressure from investors betting that the euro zone could eventually break up with the yield spread of French, Austrian and Belgian 10-year bonds over German Bunds rising to euro-era highs. The equivalent Dutch spread hit levels not seen since early 2009.
Global stocks sank, while the euro dropped. [MKTS/GLOB]
Markets slipped despite the arrival of new government leaders in both Italy and Greece, with investors uncertain about what actions would follow in the two highly indebted nations.
"The expectations are that these countries are in dire straits and a change in leadership doesn't necessarily change the facts on the ground," said Askari.
In the near term, Askari said he expected resistance to be at around C$1.0290 to the U.S. dollar, while support would hold at C$1.0150.
BONDS PRICES HIGHER
Canadian government bond prices were firmly higher, following the broader market trend that saw U.S. benchmark 10-year yields break 2 percent on euro zone woes. [US/]
The two-year bond CA2YT=RR edged 2 Canadian cents higher to yield 0.901 percent, while the 10-year bond CA10YT=RR was up 11 Canadian cents to yield 2.109 percent. (Editing by Jeffrey Hodgson)