CANADA FX DEBT-C$ hits near 4-week low as stocks fall, trade deficit widens

    * Canadian dollar at C$1.2548, or 79.69 U.S. cents
    * Loonie touches its weakest since Jan. 11 at C$1.2569
    * Oil prices fall 1.1 percent 
    * Bond prices mixed across a steeper yield curve

    By Fergal Smith
    TORONTO, Feb 6 (Reuters) - The Canadian dollar slipped to a
nearly four-week low against its U.S. counterpart on Tuesday as
a sell-off in global equity markets continued and oil prices
fell, while domestic data showed a wider-than-expected trade
     Canada's trade deficit in December widened to C$3.19
billion as imports grew faster than exports, Statistics Canada
said. Analysts had forecast a deficit of C$2.20 billion.
    Widening of the deficit toward the extreme levels seen in
2017 is a reason "we've been persistent bears on the $C," Nick
Exarhos, an economist at CIBC Capital Markets, said in a
research note. 
    World stock markets nosedived for a fourth day running,
having seen nerves about higher interest rates and overcooked
valuations wipe $4 trillion off what just eight days ago had
been record highs.             
    Commodity-linked currencies, such as the Canadian dollar,
tend to underperform when stocks fall, because of the signal
that it sends on prospects for global economic growth.    
    The price of oil, one of Canada's major exports, fell for a
third day. U.S. crude        prices were down 1.1 percent at
$63.45 a barrel.             
    At 9:12 a.m. EST (1412 GMT), the Canadian dollar         
was trading 0.1 percent lower at C$1.2548 to the greenback, or
79.69 U.S. cents.
    The currency's strongest level of the session was C$1.2505,
while it touched its weakest since Jan. 11 at C$1.2569.
    In separate data, home sales in Toronto fell 22 percent in
January from a year earlier as rising interest rates and tighter
mortgage rules weighed on demand, but prices have stabilized as
stubborn sellers and tight supply kept the correction in check.
    Canadian government bond prices were mixed across a steeper
yield curve, with the two-year            up 2 Canadian cents to
yield 1.782 percent and the 10-year             falling 28
Canadian cents to yield 2.328 percent.
    The gap between Canada's 10-year yield and its U.S.
equivalent narrowed by 6.7 basis points to -43.5 basis points as
Treasuries rallied on a flight to quality.    
    Bank of Canada Senior Deputy Governor Carolyn Wilkins on
Thursday will give a speech, which could offer the next clues on
the outlook for interest rates. Canada's employment report for
January is due on Friday.

 (Reporting by Fergal Smith
Editing by Jonathan Oatis)