CANADA FX DEBT-C$ falls below 70 U.S. cents for first time since May 2003

(Adds comment, details; updates prices)
    * Canadian dollar last at C$1.4272, or 70.07 U.S. cents
    * Currency hit a fresh 12-year low at C$1.4316 or 69.85 U.S.
    * Bond prices higher across the maturity curve

    By Fergal Smith and Alastair Sharp
    TORONTO, Jan 12 (Reuters) - The Canadian dollar on Tuesday
weakened below 70 U.S. cents for the first time since May 2003
as a slump in oil prices extended to near $30 a barrel and
traders increased their bets that the Bank of Canada will cut
interest rates this month.
    The last time the Canadian dollar traded below that
psychological threshold, U.S. crude oil prices were also
trading below $30 a barrel, near the start of a bull run that
would hit a record high above $147 a barrel by July 2008.
    This time around there is little hope oil prices will
rebound anytime soon, with global production vastly outpacing
demand and concern growing about weakening in No. 2 consumer
China's economy. 
    Crude prices have fallen almost 17 percent so far this year,
after shedding 35 percent in 2015.
    The Canadian dollar fell 16 percent last year and has shed
another 3 percent in the first days of 2016.
    "We went up there (in U.S. dollar terms) very quickly," said
David Bradley, director of foreign exchange trading at
Scotiabank, "basically because of the meltdown in oil."
    It was last trading at C$1.4272 to the greenback, or 70.07
U.S. cents, weaker than the Bank of Canada's official close from
Monday of C$1.4223, or 70.31 U.S. cents. 
    At one point it hit C$1.4316, or 69.85 U.S. cents
    The sustained weakness in the price of oil, a major Canadian
export, increases pressure on Canada's central bank to act.
    "People are calling for the Bank of Canada to cut rates at
the next meeting," said Scotiabank's Bradley.
    The central bank's next interest rate announcement is on
Jan. 20. The market has implied an almost one-in-three perceived
chance of a cut, up from roughly one in five a week ago, and has
fully discounted one by May. 
    Speculation that the Bank of Canada will take further action
after cutting rates twice in 2015 is also adding pressure on the
currency, especially as the Federal Reserve has starting to
raise U.S. rates. 
    A Jan. 7 speech by Governor Stephen Poloz left investors
doubtful he would cut Canada's benchmark rate this month.
    But the Bank of Canada's quarterly Business Outlook Survey
has since revealed deterioration in sentiment. 

 (Editing by James Dalgleish)