CANADA FX DEBT-C$ weakens against U.S. as Europe fears weigh

   * C$0.9878 vs US$, or $1.0124

 * C$ mostly stronger against commodity-linked peers

 * Bond prices stronger across the curve

 TORONTO, Sept 19 (Reuters) - The Canadian dollar was weaker
on Monday against the U.S greenback as investors moved away
from risk, fearing a Greek default within weeks and fallout in
Europe as the debt crisis there remained unsolved.

 World stocks and the euro fell sharply as international
lenders told Greece that it must shrink its public sector and
improve tax collection to secure a vital 8 billion euro rescue
payment next month or face default. [MKTS/GLOB]

 After a rare four-day rally in world stocks last week,
markets fear the crisis is worsening again after Greece's prime
minister canceled a U.S. trip to chair an emergency cabinet
meeting at home and German Chancellor Angela Merkel suffered a
regional election loss. [ID:nL5E7KI0N6]

 EU finance ministers also failed to make progress on the
debt crisis at the weekend, and the focus is now shifting to a
conference call between Greece and its international lenders at
1600 GMT to see how Greece plans to make up its budget
shortfall and avoid a disorderly default. [ID:nLDE78G00Z]

 "There has been a move in general risk appetite that has
its source in the euro zone, whereby there was some
disappointment this morning that the (EU finance ministers)
meeting over the weekend didn't produce anything, so there is
still an overhang of concern about Greece," said Adam Cole,
global head of FX strategy at RBC Capital Markets in London.

 The Canadian dollar CAD=D4 stood at C$0.9878 to the U.S.
dollar, or $1.0124 U.S. cents, down from Friday's North
American session close of C$0.9790 to the U.S. dollar, or
$1.0215 U.S. cents.

 The weaker open against the U.S. dollar came as the
European debt fears drove investors to the relative safety and
liquidity of the U.S. dollar. Against most other
commodity-linked currencies, the Canadian dollar was stronger.

 Cole said the strength of the U.S. dollar was likely to
help Canada's currency make gains on the crosses, particularly
against other commodity-linked currencies through the session.

 "Although the Canadian dollar is weaker today against U.S.
dollar, it's stronger against virtually everything else, so if
you continue to get this overhang of concern on Europe and a
generally negative environment for risk, the net effect should
be that you see Canadian dollar appreciation against Aussie
dollar or Kiwi dollar or Scandinavian currencies," he said.

 Bond prices were higher across the curve as government debt
attracted safe-haven flows.

 The two-year bond CA2YT=RR was up 7 Canadian cents to
yield 0.978 percent, while the 10-year bond CA10YT=RR was up
63 Canadian cents to yield 2.218 percent.
 (Editing by Jeffrey Hodgson)