CANADA FX DEBT-C$ sinks to year low on growth fears

 *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 dollar CAD=D3 was 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 bond CA2YT=RR was up 7 Canadian cents to
yield 0.907 percent, while the 10-year bond CA10YT=RR gained
30 Canadian cents to yield 2.187 percent.

  (Reporting by Claire Sibonney, Editing by Chizu Nomiyama)