November 26, 2010 / 2:01 PM / 10 years ago

CANADA FX DEBT-C$ slides as euro zone woes grip markets

 * C$ sharply lower at 97.70 U.S. cents
 * Bonds higher on euro zone contagion worries
 TORONTO, Nov 26 (Reuters) - The Canadian dollar skidded
more than a penny on Friday as the risk appetite of investors
was hit hard with financial markets rattled by worries over
peripheral euro zone debt.
 Commodity prices, European stocks and the euro slid against
the dollar on Friday, while Wall Street looked set to open
lower following its Thanksgiving break the day before.
 European officials denied "absolutely false" reports
Portugal was under pressure to seek a bailout and Spain ruled
out needing help to manage its finances, despite fears of a
spreading euro debt crisis. [ID:nLDE6AP08Y]
 As well, China warned against military acts near its
coastline ahead of U.S.-South Korean naval exercises that North
Korea said risked pushing the region towards war. The North
shelled a South Korean island earlier this week.
 "(The U.S. dollar) vaulted higher in the European session
with recent CAD gains on speculation of future rate hikes being
swept away instantly by the negative impact of Korean (and)
European events," John Curran, senior vice president at
CanadianForex, said in a note to clients.
 "Volatility will remain as holiday thinned market reactions
to any further news will exaggerate moves."
 The Canadian currency CAD=D4 touched a low of C$1.0247 to
the U.S. dollar, or 97.59 U.S. cents. At 8:45 a.m. (1345 GMT),
it stood at C$1.0235 to the U.S. dollar, or 97.70 U.S. cents,
down sharply from Thursday's close at C$1.0097 to the U.S.
dollar, or 99.04 U.S. cents.
 Canadian bonds firmed across the curve, tracking U.S.
Treasuries, as prices climbed on mounting speculation Portugal
will follow Ireland in seeking bailout funding. [US/]
 The two-year government of Canada bond CA2YT=RR rose 6
Canadian cents to yield 1.699 percent, while the 10-year bond
CA10YT=RR was up 22 Canadian cents to yield 3.142 percent.
 (Reporting by Jennifer Kwan; Editing by Jeffrey Hodgson)

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