CANADA FX DEBT-C$ hit by falling oil price, bonds rise

* Oil falls more than 4 percent

* Currency pares losses after U.S. consumer spending data

* Bonds firm ahead of Fed purchase

TORONTO, March 27 (Reuters) - The Canadian dollar weakened against the U.S. currency on Friday, hurt by falling oil prices.

Crude oil dropped more than 4 percent to near $52 a barrel. Canada is a major exporter of oil and often tracks the rise and fall of the commodity.

At 9:30 a.m. (1430 GMT), the Canadian currency was at C$1.2368 to the U.S. dollar, or 80.85 U.S. cents, down from C$1.2289 to the U.S. dollar, or 81.37 U.S. cents, at Thursday’s close.

“We’ve had quite a rapid decline in oil prices this morning. It’s been a persistent march downward, and in turn I think that’s probably a main factor pulling the commodity currencies down,” said Eric Lascelles, chief economics and rates strategist at TD Securities.

Lately, equity and commodity markets have served as a barometer of risk sentiment for the Canadian dollar. But neither market has been able to convincingly pull the currency out of the C$1.22-C$1.24 range it has been hemmed into all week.

The currency pared losses from a low of C$1.2412 to the U.S. dollar hit earlier in the morning as data showed U.S. consumer spending rose for a second straight month in February, in line with market expectations. [ID:nN27544329]


Canadian government bonds were higher across the curve on Friday as the market faces a second purchase of government bonds by the U.S. Federal Reserve.

Supply had been a weighing factor all week, but the market managed, though not without difficulty, to absorb a record-breaking $98 billion in Treasury coupon supply. The market expects a huge supply of bonds to come to market this year to help pay for U.S. government stimulus programs.

The two-year bond rose 4 Canadian cents to C$100.20 to yield 1.156 percent. The 10-year bond rose 11 Canadian cents to C$107.61 to yield 2.881 percent.

The 30-year bond climbed 15 Canadian cents to C$123.85 to yield 3.639 percent. The U.S. 30-year bond yielded 3.628 percent. (Reporting by Ka Yan Ng and Jennifer Kwan; editing by Peter Galloway)