CANADA FX DEBT-Loonie hits two-month low on China data

* Canadian dollar at C$1.0947 or 91.35 U.S. cents
    * Bond prices lower across the maturity curve

    By Leah Schnurr
    TORONTO, Aug 5 (Reuters) - The Canadian dollar weakened on
Tuesday to its lowest in two months against the greenback,
extending a recent rout following data that underscored concerns
about growth in China, the world's second-biggest economy. 
    The loonie has shed 2.5 percent since the beginning of July
as optimism that the U.S. recovery was gaining momentum prompted
investors to snap up the greenback.
    Analysts expect the downward trend for the Canadian dollar
is likely to continue. The latest catalyst was data overnight
that showed growth in China's services sector slowed to a
nine-year low in July. 
    The Canadian dollar is often sensitive to economic news out
of China, a key consumer of resources.
    "With China potentially slowing down or not stabilizing to
the extent that the government would like it to, that would put
pressure on their export demand, which would in turn harm the
loonie, which is why we're seeing a bit of weakness," said    
Scott Smith, senior market analyst at Cambridge Mercantile Group
in Calgary.
    The Canadian dollar was at C$1.0947 to the
greenback, or 91.35 U.S. cents, weaker than Friday's official
Bank of Canada close of C$1.0926, or 91.52 U.S. cents. 
    Many market participants in Canada were away on Monday for
the Civic Holiday.
    The longer the U.S. dollar-Canadian dollar stays above the
C$1.09 level and its 200-day moving average around C$1.0850, the
more that will create upward momentum for the currency pairing,
said Smith.
    Later in the week, investors will get a look at some key
domestic economic reports, including June's trade balance on
Wednesday and the employment report for July on Friday. 
    Canadian government bond prices were lower across the
maturity curve, with the two-year off 1-1/2 Canadian
cents to yield 1.079 percent and the benchmark 10-year
 down 15 Canadian cents to yield 2.134 percent.

 (Editing by Bernadette Baum)