Canada economy to grow at slower pace in 08-report

TORONTO, April 7 (Reuters) - The Conference Board of Canada said on Monday it expects real gross domestic product to grow at a slower pace in 2008 than previously thought given the U.S. economic turmoil and lofty Canadian dollar.

According to its Spring outlook, the Conference Board said Canadian GDP growth will advance by 2.2 percent this year. That is down from its previous forecast of 2.8 percent, and off the 2.7 percent gain the domestic economy posted in 2007.

But the Conference Board says a stable exchange rate and a recovering U.S. economy will help real gross domestic product rise by 3 percent in 2009 and by 3.1 percent in 2010.

And while the Bank of Canada's interest rate cuts - 100 basis points since December - have weighed on the Canadian currency along with lower commodity prices, the Conference Board expects the dollar to average 99 U.S. cents over 2008 and 2009.

The commodity-linked Canadian dollar has been wedged in a range near parity for several months but remains well below the modern-day high of US$1.1039 it hit last November. At 11:17 a.m. on Monday (1517 GMT), the Canadian currency was at C$1.0122 to the U.S. dollar, or 98.79 U.S. cents.

"Demand for gold and oil in particular has been lifted recently by speculators looking for a safe haven from volatile stock markets, inflation, and a depreciating greenback," the report said. "This scenario should serve to keep the Canadian dollar from falling much lower despite the current cycle affecting the U.S. and Canadian economies." (Reporting by Frank Pingue; Editing by Renato Andrade)