CANADA FX DEBT-C$ softens as U.S. debt deal talks stall

* C$ at C$1.0380 vs US$, or 96.34 U.S. cents
    * C$ weakens to multi-month lows against Aussie and New
Zealand dollars
    * Bond prices mostly lower across curve

    By Solarina Ho
    TORONTO, Oct 15 (Reuters) - The Canadian dollar was weaker
against its U.S. counterpart on Tuesday as talks between
Washington lawmakers over raising the U.S. debt ceiling stalled
just days ahead of when the U.S. Treasury says the government
will reach its borrowing limit.
    The Senate halted discussions on its own plan, as it waited
for the fractious Republican-controlled House of Representatives
to come up with an alternative proposal before Oct. 17, when the
government is expected to reach its limit of $16.7 trillion.
    The U.S. government shutdown and any economic impact from
defaulting would not bode well for Canada, whose largest trading
partner is the United States.
    "It's really hard to trace a lot of flows, there's really
not a lot of risk from people on the table ... there's too much
uncertainty and we're just waiting for stuff to clear in
Washington," said Darcy Browne, Managing Director at Capital
Markets Trading, CIBC.
    "Dollar/Canada's really kind of smack in the middle of the
range and unattractive. There just hasn't been a story there."
    The Canadian dollar finished its North American
session at C$1.0380 versus the greenback, or 96.34 U.S. cents,
softer than Monday's Thanksgiving holiday close at C$1.0349, or
96.63 U.S. cents.
    The Canadian dollar's performance was mostly weaker against
other key currencies. It touched multi-month lows against its
commodities sister currencies, hitting its softest level against
the Australian dollar since early June and its weakest
level against the New Zealand dollar since late
    Domestically, Sales of existing homes in Canada jumped in
September from a year ago and prices rose, though analysts
cautioned the gains came partly on the back of depressed
activity in 2012 that followed tighter mortgage rules.
    Figures from the Teranet-National Bank Composite House Price
Index showed Canadian home prices were unchanged in September
after hitting a record high the month before, suggesting the
housing market is cooling.
    Government bond prices were mostly lower across the maturity
curve, with the two year bond off 44 Canadian cents
to yield of 1.231 percent and the benchmark 10-year bond
 falling 45 Canadian cents to yield 2.649 percent.