CANADA FX DEBT-C$ strongest in more than 3 months after weak U.S. GDP

* Canadian dollar at C$1.2020 or 83.19 U.S. cents
    * Bond prices mostly lower across the maturity curve

    TORONTO, April 29 (Reuters) - The Canadian dollar
strengthened against a weaker U.S. dollar on Wednesday, touching
its highest level since before a surprise January rate cut,
after data showed the U.S. economy barely grew during the first
    U.S. gross domestic product expanded at an annual rate of
just 0.2 percent, far short of the 1 percent economists had been
forecasting and the 2.2 percent pace of the fourth quarter, as
frigid winter weather kept consumers from spending and cheap oil
prices forced energy companies to cut costs.
    The data pushed the greenback to its lowest level in eight
weeks against a basket of major currencies. 
    * At 9:08 a.m. EDT (1308 GMT), the Canadian dollar 
was trading at C$1.2020 to the greenback, or 83.19 U.S. cents,
stronger than the Bank of Canada's official close of C$1.2030,
or 83.13 U.S. cents.
    * At one point after the GDP data, the currency rallied to
C$1.199, its strongest level since January 20, just before the
Bank of Canada issued a surprise 25 basis point interest rate
cut. Its weakest level of the session was C$1.2074.
    * In Canada, producer prices unexpectedly increased, rising
0.3 percent in March from February, bolstered by higher prices
for energy and petroleum products. Economists had forecast a 0.1
percent decrease. 
    * The Federal Reserve wraps up its two-day policy meeting on
Wednesday and will issue its rate decision and statement at 2
p.m. EDT.
    * U.S. crude prices were down 0.42 percent to $56.82,
while Brent crude added 0.12 percent to
    * The Canadian dollar is expected to trade between C$1.1950
and C$1.2120 against the U.S. dollar on Wednesday, according to
National Bank Financial Group.
    * Canadian government bond prices were mostly lower across
the maturity curve, with the two-year price down 7
Canadian cents to yield 0.714 percent and the benchmark 10-year
 falling 84 Canadian cents to yield 1.645 percent.
    * The Canada-U.S. two-year bond spread was 13.5 basis
points, while the 10-year spread was -42.8 basis points.

 (Reporting by Solarina Ho; Editing by Nick Zieminski)