CANADA FX DEBT-C$ slides half a cent on 'dismal' factory sales

* C$ ends at $1.0061 vs US$, or 99.39 U.S. cents
    * Manufacturing sales fall the most in 3-1/2 years in Dec
    * Bond prices slip across curve

    By Solarina Ho
    TORONTO, Feb 15 (Reuters) - The Canadian dollar gave back
half a cent against its U.S. counterpart on Friday following
surprisingly weak domestic manufacturing data that underscored
the negative impact of the strong currency on exports.
    Economic data from the United States that indicated its
manufacturing sector got off to a soft start this year also
pressured the currency. 
    "The U.S. industrial production was a bit on the soft side.
That has negative implications for Canada as well. I think that
set the tone initially," said Don Mikolich, executive director,
foreign exchange sales at CIBC World Markets.
    "It's a light week for Canadian news. The only piece of
Canadian news this week was a negative one."
    The country's manufacturing sales recorded the sharpest drop
in about 3-1/2 years in December, due in part to weaker auto
production and lower sales across most other industries,
government data showed. 
    "It's a pretty dismal report. Not a nice way to end a year,"
said Sal Guatieri, senior economist at BMO Capital Markets.
    "Very few regions are immune to the negative impact of the
high Canadian dollar. It's not surprising the currency would
weaken on such a dismal report."
    The Canadian dollar weakened to C$1.0061 versus the U.S.
dollar, or 99.39 U.S. cents from Thursday's North American
session close at C$1.0012, or 99.88 U.S. cents.
    "Moving back into the mid-parity area had people taking
another crack some (U.S.) dollar selling, a bit of hedging
activity as well," said Mikolich.
    Canada's performance was mixed against other countries. It
was outperforming the Japanese yen. But it weakened against the
euro and its neighboring currencies.
    The yen fell on Friday after three days of gains against the
U.S. dollar and the euro as a draft statement from the Group of
20 nations, which are meeting in Moscow, did not single out
Japan for undertaking policies that have weakened its currency.
    Looking ahead next week, Canadian inflation and retail sales
data will be in focus.
    "CPI being so weak last time, people are paying a bit more
attention to it now and how far out does the Bank of Canada get
pushed before it really does consider raising rates," said
    "That horizon continues to drift outwards until the data
suggests otherwise."
    Canadian government bonds fell across the curve, with the
two-year bond off 1 Canadian cent to yield 1.133
percent and the benchmark 10-year bond easing 15
Canadian cents to yield 2.017 percent.