CANADA FX DEBT-C$ hurt by softer commodity prices as China weighs

Reuters

* Canadian dollar at C$C$1.1145 or 89.73 U.S. cents * Bond prices mostly rise across the maturity curve By Solarina Ho TORONTO, March 12 (Reuters) - The Canadian dollar softened against its U.S. counterpart on Wednesday as commodity prices slid on worries over slowing growth in China, the world's second-largest economy.

Investors are awaiting fresh economic data from China, including industrial output, retail sales and urban investment for further clarity on the direction of the Chinese economy, a major market for Canadian raw materials exports.

Copper tumbled to the lowest levels in over three years on Tuesday as investors and speculators intensified selling because of worries about Chinese demand and liquidation of inventories used for finance deals.

Crude prices fell amid worries that fuel demand could shrink from the world's two biggest oil consumers, China and the United States. U.S. data showed crude stocks rose more than forecast, signaling a slowdown in demand as the weather improved.

The Canadian dollar is often sensitive to commodity prices given the country exports much of its oil, mineral and food production.

"A lot of the slowing growth numbers (in China) is leading to the drop in commodity prices. That's one of the things that's set a bit of a negative for the Canadian dollar," said Don Mikolich, executive director, foreign exchange sales at CIBC World Markets.

"We're still kind of suffering a little bit from the flight to safety over the Ukraine crisis. That will keep us pinned down a little bit as well." Around 9:47 a.m. (1347 GMT), the Canadian dollar was at C$1.1145 to the greenback, or 89.73 U.S. cents, weaker than Tuesday's close of C$1.1103, or 90.07 U.S. cents.

The Canadian dollar, which was underperforming all other major currency counterparts except for the Australian dollar , was expected to trade between C$1.1050 and C$1.1170 in the short-term, Mikolich said.

The commodities-linked Australian dollar is even more sensitive to sentiment on China.

Canadian government bond prices were mostly higher across the maturity curve, with the two-year bond up 1.5 Canadian cents to yield 1.027 percent and the benchmark 10-year was up 30 Canadian cents to yield 2.455 percent.

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