CANADA FX DEBT-C$ weakens as European worries unnerve investors

* C$ at C$0.9834 vs US$, or $1.0169
    * Euro zone concerns spark equity selloff
    * Bond prices rise across the curve

    TORONTO, Sept 26 (Reuters) - The Canadian dollar edged lower
against its U.S. counterpart on Wednesday, tracking global
markets, as worries about the world economy and a bailout for
Spain weighed on sentiment.
    Stock markets fell around the world on Wednesday and the
European single currency hit a two-week low as popular
opposition within the euro zone to austerity unnerved investors
already worried about a weak global growth outlook.
    Concern about a bailout for Spain and over the euro zone's
ability to tackle its financial crisis has sparked a sharp rise
in volatility on equity markets, leading to the worst day since
June for the S&P 500 index on Tuesday and subsequent falls
across Asia. 
    "There's no one thing in particular the market's focusing
on. We've just had this constant drip-feed of what's been taken
as negative news," said Adam Cole, global head of FX strategy at
RBC Capital Markets in London.
    "None of them is really new, nothing that we didn't already
know, but the fact that it's just been relentless all day, 
really, has given us this negative tone for risk generally and
that's weighing on the Canadian dollar."
    At 9:06 a.m. (1306 GMT), the Canadian dollar stood
at C$0.9834 versus the U.S. dollar, or $1.0169, down from
Tuesday's North American session close at C$0.9806, or $1.0198.
    Cole said that with little domestic news expected to drive
the currency, the top of the range for the Canadian dollar
should be capped around C$0.9840, near current levels.
    "It would take significant news to get it to break up
through that," said Cole, adding that in the near term, the
currency should not weaken too much more than C$0.99 to the U.S.
dollar due to the Federal Reserve's ambitious stimulus program.
    Canadian government bond prices were higher across the
curve. The two-year bond rose 3.2 Canadian cents to
yield 1.106 percent, while the benchmark 10-year bond
 gained 44 Canadian cents, yielding 1.767 percent.