*C$ hits low of C$1.0464 vs US$, or 95.57 U.S. cents
*Bond prices rally across curve
TORONTO, Sept 30 (Reuters) - The Canadian dollar sank to its weakest level in more than a year against the U.S. dollar on Friday, sliding for the third day after weak European economic readings and the lack of a broad solution to the euro zone's worsening debt woes.
Data that showed German retail sales suffered their biggest drop in more than four years in August compounded fears over global growth, while markets doubted the firepower of a beefed-up euro zone bailout fund. [MKTS/GLOB]
European shares were on track to mark their biggest quarterly loss since the collapse of Lehman Bros three years ago and U.S. futures pointed to a negative open on Wall Street, intensifying the risk-off mood. [.N]
"It's hard to point to what's really driving it, clearly the fall in equity futures is setting the tone in FX markets and the tone is just risk-off across the board," said Adam Cole, global head of FX strategy at RBC Capital Markets in London.
At 7:45 am (1145 GMT), the Canadian dollarwas at C$1.0456, or 95.64 U.S. cents, down from Thursday's North American session close at C$1.0366 to the U.S. dollar, or 96.47 U.S. cents. Earlier, it touched as low as C$1.0464, or 95.57U.S. cents, its softest level since Sept. 8, 2010.
Cole said the currency was quite stretched at these levels, breaking through most of the recent support targets in the C$1.03-C$1.04 area. If markets continue to shed risk, C$1.05 is the next pyschological level to watch followed by congestion around C$1.0650.
Bond prices marched higher across the curve. The two-year Canadian government bondwas up 7 Canadian cents to yield 0.907 percent, while the 10-year bond gained 30 Canadian cents to yield 2.187 percent.
(Reporting by Claire Sibonney, Editing by Chizu Nomiyama)
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