CORRECTED-CANADA FX DEBT-Sinking crude pushes C$ to 5-1/2-year lows near C$1.16

(Corrects third paragraph to say stock index has fallen about 5
percent, not 10 percent)
    * Canadian dollar at C$1.1558 or 86.52 U.S. cents
    * Bond prices higher across the maturity curve

    By Solarina Ho
    TORONTO, Dec 12 (Reuters) - The Canadian dollar was within
striking distance of C$1.16 against the greenback on Friday as
it hit fresh 5-1/2 year lows  on new worries over a supply glut
in the oil market spurred by an International Energy Agency
    The agency, which coordinates the energy policies of
industrialized countries, forecast an increase in global
supplies next year but cut its outlook for global oil demand by
230,000 barrels per day.  
    Canada is a major oil exporter and the currency's
sensitivity to crude prices has magnified as the prices have
plunged to 5-1/2 year lows since June. Canada's main stock
index, home to a hefty number of oil and gas producers, has
dived about 5 percent this week. 
    "Generally, it's just ongoing pressure with oil prices still
moving more, equities lower and risk aversion higher, and none
of it is feeding particularly well into the Canadian dollar
outlook," said Camilla Sutton, chief currency strategist at
    "We haven't been at these levels in over five years, so it
starts to make the whole numbers pretty important, like C$1.16,
    At 9:17 a.m. (1419 GMT), the Canadian dollar was at
C$1.1558 to the greenback, or 86.52 U.S. cents, after touching
C$1.1591, or 86.27 U.S. cents earlier in the session, its
weakest level since July 13, 2009. It finished at C$1.1527, or
86.75 U.S. cents on Thursday.
    Next week, Canada will release a slew of top-tier economic
data, including manufacturing sales, wholesale trade, retail
sales for October, and November inflation figures. The U.S.
Federal Reserve will also meet to make its next policy decision.
    "So we'll have a really good update on how the economic
outlook is unfolding," Sutton said.
    Canadian government bond prices were higher across the
maturity curve, with the two-year adding 5.5 Canadian
cents to yield 0.990 percent and the benchmark 10-year
 rising 33 Canadian cents to yield 1.790 percent.

 (Reporting by Solarina Ho; Editing by Peter Galloway)