CANADA FX DEBT-C$ weaker as Merkel comments boost greenback, oil slips

* Canadian dollar at C$1.2345, or 81.00 U.S. cents
    * Bond prices mixed across the maturity curve

    By Andrea Hopkins
    TORONTO, June 12 (Reuters) - The Canadian dollar softened
further against the greenback on Friday as the U.S. currency
benefited from comments by German Chancellor Angela Merkel about
the problem of a strong euro and the price of oil continued to
    The euro sank on Friday after Merkel made a rare comment on
exchange rates by saying a strong euro made it harder for
countries like Spain and Portugal to reap the benefits of
economic reform. 
    World shares saw a muted end on Friday to what has been
their best week since April, as yet another setback in Greek
debt talks took its toll on European markets. 
    * At around 9:26 EDT (1326 GMT), the Canadian dollar
 was at C$1.2345 to the greenback, or 81.00 U.S. cents,
weaker than Thursday's close at C$1.2275, or 81.47 U.S. cents.
    * The currency has traded between C$1.2279 and C$1.2347 so
far in the session.
    * In Canada, Canadian home prices rose in May to a record
high despite a drop in Calgary as weak oil prices continued to
hurt demand in Canada's energy heartland, the Teranet-National
Bank Composite House Price Index showed on Friday.
    * In the U.S., producer prices in May recorded their biggest
increase in more than 2-1/2 years as the cost of gasoline and
food rose, suggesting that an oil-driven downward drift in
prices was nearing an end. 
    * Brent crude was trading 32 cents lower at $64.79 a
barrel at 1100 GMT, while U.S. light crude was down 53
cents at $60.24. Oil prices slipped on Friday after the world's
top crude exporter Saudi Arabia said it was ready to raise
output to new record highs, potentially adding to a global
supply glut. 
    * Canadian government bond prices were mixed across the
maturity curve, with the two-year rising 0.5 Canadian
cent to yield 0.652 percent and the benchmark 10-year
 falling 11 Canadian cents to yield 1.825 percent.

 (Reporting by Andrea Hopkins; Editing by Andrew Hay)