CANADA FX DEBT-C$ beats moderate retreat as U.S. oil sinks below $49

* Canadian dollar at C$1.1785 or 84.85 U.S. cents
    * Bond prices higher across the maturity curve

    By Solarina Ho
    TORONTO, Jan 6 (Reuters) - The Canadian dollar weakened
slightly against the U.S. dollar on Tuesday as crude prices
extended their sharp losses on deepening concern about excess
supply around the world.
    Canada is a major exporter of oil, and its currency has been
hit hard as crude prices have tanked more than 50 percent over
the past six months. They hit fresh 5-1/2 year lows this week as
Saudi Arabia cut selling prices to Europe and major producers
showed no signs of scaling back production despite the supply
glut. U.S. prices fell below $49 a barrel on Tuesday.
    The Canadian dollar, which lost 8.6 percent last
year largely due to the plunge in oil, was trading at C$1.1785
to the greenback, or 84.85 U.S. cents, weaker than Monday's Bank
of Canada close of C$1.1749, or 85.11 U.S. cents.
    The loonie was also underperforming most other major
    "You could argue in the context of the price movements that
we've been seeing over the last 24 hours or so, that the
currency has held in comparatively well. But there's still a
residual bid underpinning the market," said Jeremy Stretch, head
of foreign exchange strategy at CIBC World Markets in London.
    Stretch said the loonie could retreat as far as C$1.1950 to 
the greenback in the very near term as investors cast their eye
toward key economic data this week, including Canada's trade
balance for November, which is due on Tuesday, and Canadian and
U.S. employment data for December on Friday.
    Canadian government bond prices were higher across the
maturity curve, with the two-year up 3 Canadian cents
to yield 0.966 percent and the benchmark 10-year 
climbing 29 Canadian cents to yield 1.657 percent.

 (Editing by Peter Galloway)