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CANADA FX DEBT-C$ falls to 4-1/2 yr low as GDP growth fails to support

* Canadian dollar at C$1.1209 or 89.21 U.S. cents * Bond prices higher across the maturity curve By Leah Schnurr TORONTO, Jan 31 (Reuters) - The Canadian dollar broke through the C$1.12 level and fell to a 4-1/2 year low against the greenback on Friday as data that showed the domestic economy grew in line with expectations in November failed to dissuade investors from selling the loonie.

At the same time, risk aversion around the world was heightened after data showed an unexpected drop in euro zone inflation and as emerging markets were hit by fresh turbulence.

The Canadian economy grew by 0.2 percent in November, slightly softer than the month before as a recovery in the oil industry overcame a decline in manufacturing. The figure matched economists' expectations.

The loonie initially held steady after the data was released but then fell. It has hit new 4-1/2-year lows for four sessions in a row.

A shift by the Bank of Canada to a more dovish policy stance has weighed on the Canadian dollar in recent months and the pressure has intensified since the start of the year as investors have turned increasingly short against the currency. The U.S. dollar has appreciated more than 5 percent against the loonie in January.

"I think the market just has this bias towards weakness," said Mazen Issa, macro strategist at TD Securities in Toronto.

"A lot of that has been engrained from the dovish rhetoric that we've received from the bank." "So if anything, I would characterize reaction as asymmetric. Anything that comes in as expected or slightly weaker is likely to garner a little bit more downside reaction compared to something that is a positive surprise," Issa said.

The Canadian dollar was at C$1.1209 to the greenback, or 89.21 U.S. cents, weaker than Thursday's close of C$1.1166, or 89.56 U.S. cents. It fell as low as C$1.1225, its lowest level since July 2009.

"The downward trend in the Canadian dollar is too strong to fight or attempt to pick a bottom," Camilla Sutton, chief currency strategist at Scotiabank, wrote in a note.

"We expect ongoing Canadian dollar weakness before it stabilizes in the second half of the year." Canadian government bond prices were higher across the maturity curve, with the two-year up 2 Canadian cents to yield 0.960 percent and the benchmark 10-year up 19 Canadian cents to yield 2.350 percent.