(Fixes to "U.S." dollar in first paragraph)
* C$ at C$1.0264 vs US$, or 97.43 U.S. cents
* Bond prices flat to higher across curve
By Claire Sibonney
TORONTO, Nov 17 (Reuters) - The Canadian dollar eased for a fourth straight day against the U.S. dollar on Thursday as surging yields at a Spanish bond auction stoked fears about contagion of the euro zone's debt problems.
Spain paid more to sell 10-year government bonds than at any time since 1997, when it still used the peseta, while a separate auction saw two- and four-year borrowing costs for AAA-rated France jump by around half a percentage point. [ID:nL5E7MH16P]
The auctions were held at a critical time, with the debt crisis threatening to ensnare France and other core euro zone economies like the Netherlands and Finland.
"The story is the same story that it's been all week. The story is basically Europe and it's headline driven," said Michael O'Neill, vice-president of FX Trading at RJOFX Canada.
At 7:55 a.m. (12:55 GMT), the Canadian dollar CAD=D4 stood at C$1.0264 against the U.S. dollar, or 97.43 U.S. cents, down from Wednesday's North American session close at C$1.0229 against the U.S. dollar, or 97.76 U.S. cents.
"We're starting to look like we're breaking resistance in the C$1.0250-60 level but it's still the skinny time of the day," added O'Neill. "Risk-reward now favors a weaker Canada testing C$1.0320."
Investors will eye data on U.S. housing, jobless claims and Canadian securities transactions at 8:30 a.m. for further direction, as well as the Philadelphia Fed's business activity report later in the morning.
Canadian government bond prices were little changed across the curve. The two-year bond CA2YT=RR rose 1 Canadian cent to yield 0.889 percent, while the 10-year bond CA10YT=RR eased 5 Canadian cents to yield 2.105 percent.
(Reporting by Claire Sibonney, Editing by Chizu Nomiyama)