CANADA FX DEBT-C$ firms but kept to range by U.S. government shutdown
* C$ at C$1.0292 vs US$, or 97.16 U.S. cents * U.S. gov't shutdown in 4th day, raises debt ceiling concerns * Bond prices lower across curve By Leah Schnurr TORONTO, Oct 4 (Reuters) - The Canadian dollar strengthened on Friday though the currency remained in a range as investors worried that a four-day government shutdown in the United States was bringing lawmakers closer to a potentially more urgent deadline to raise the debt ceiling. A political impasse over the U.S. budget has shut down non-essential government services and appeared likely to drag on for another week or more. Investors are concerned about what impact the standoff will have on a still-fragile economic recovery. Analysts said a shutdown that drags on longer than a few days will start to bite into economic growth in the United States, Canada's biggest trading partner. "So many Canadian officials ... have highlighted the strong relationship and correlation between Canadian prosperity and that of the U.S.," said Gareth Sylvester, director at Klarity FX in Los Angeles. "It almost puts you in the same basket that if we feel that U.S. growth is going to be adversely affected by this government shutdown, then certainly that's going to impact Canada." Analysts say the longer the shutdown continues, the more likely it is that negotiations between Democrats and Republicans will lead to a larger deal that would involve raising the debt ceiling. U.S. lawmakers must raise the government's $16.7 trillion debt borrowing limit by mid-October, or the United States will be facing default. "The market is getting a wee bit more apprehensive as we draw closer to the all-important mid-October date for the debt ceiling," said Dean Popplewell, chief currency strategist at OANDA. "There's too much at stake here, not just for the United States but globally." The Canadian dollar ended the session at C$1.0292, or 97.16 U.S. cents, stronger than Thursday's close of C$1.0326, or 96.84 U.S. cents. The U.S. dollar, traditionally seen as a safe haven, rose 0.5 percent against a basket of currencies . Following a brief spike after the U.S. Federal Reserve's decision to stand pat on its economic stimulus program on Sept. 18, the Canadian dollar has been trading in a tight range. Barring a resolution or other catalyst, Sylvester sees the loonie trading in a range between C$1.0280 and C$1.0340. "There's very little evidence right now in the near term to argue we're going to see a directional break from those ranges," he said. With the government shut down in Washington, the U.S. report on nonfarm payrolls, one of the most important data releases for markets, was not issued on Friday as scheduled. At home, data showed the pace of purchasing activity in Canada picked up modestly in September as employment rebounded. Prices for Canadian government bonds were lower across the maturity curve. The two-year bond slipped 2.8 Canadian cents to yield 1.194 percent, while the benchmark 10-year bond lost 33 Canadian cents to yield 2.584 percent.