RPT-CANADA FX DEBT-C$ cuts losses on North American economic data

* C$ at C$1.0082 vs US$, 99.19 U.S. cents
    * Rebounds after hitting weakest level since Jan. 25
    * Bond prices move lower across the curve

    By Jennifer Kwan	
    TORONTO, May 16 (Reuters) - (Repeats to additional
subscribers with no change to headline or text)	
Canada's dollar rebounded from a 16-week low against the U.S.
dollar on Wednesday, lifted by better-than-expected North
American data, but broader fears of a worsening debt crisis
capped the rise of the risk-linked currency	
    The Canadian dollar rose to a session high of
C$1.0053 against the greenback, or 99.47 U.S. cents, after data
showed U.S. housing starts climbed more than expected in April,
signaling a nascent housing recovery. 	
    "The (U.S.) housing starts are encouraging," said Derek
Holt, vice president of economics at Scotiabank.	
    "We've seen a gradual healing over the course of the past
year that has the potential to be sustained over the next year."	
    Canadian data showed manufacturing sales breezed past
expectations in March from February, allaying concerns that
domestic manufacturing was in a "prolonged slump," said
    By around 9:30 a.m. (1330 GMT), the Canadian dollar 
stood at C$1.0082 versus the U.S. dollar, or 99.19 U.S. cents,
still slightly below Tuesday's North American session close at
$1.0068 versus the U.S. dollar, or 99.32 U.S. cents.	
    Still, markets were largely guided by worries about the euro
zone. Fears that a Greek exit from the euro zone will worsen the
debt crisis facing other European nations gripped financial
markets on Wednesday. 	
    A Greek departure from the euro zone would have a
potentially huge knock-on effect on struggling economies such as
Italy and Spain, whose bond yields climbed above the crucial 6
percent mark in the previous session.	
    "The problems in Europe are certainly escalating and causing
a lot of stress in the markets and I think the Canadian dollar
will unfortunately be sideswiped," said Blake Jespersen,
managing director of foreign exchange sales at BMO Capital
    Overnight, the currency slipped as far as C$1.0131, or 98.71
U.S. cents, its weakest level since Jan. 25.	
    Over the next month, Jespersen said the Canadian dollar
could tumble as far as C$1.03.	
    "The Greek election isn't until June 17 so the markets have
to wait a month for that unless we get some kind of ECB bailout
between now and then. I think the problems in Europe could
continue to escalate and it is causing a flight to quality," he
    "I think it's only a matter of time that our dollar will
start to play a little bit of catch-up with the selloff in other
asset classes."	
    Canadian bond prices moved lower across the curve. The
two-year government bond was down 6 Canadian cents to
yield 1.319 percent, while Canada's 10-year bond 
lost 23 Canadian cents to yield 1.961 percent.