CANADA FX DEBT-C$ stronger as China helps offset 'cliff' worry

* C$ at C$0.9953 to US$, or $1.0047
    * U.S. fiscal talks provide most interest; China data helps
    * C$ on track for 2.4 percent gain for year

    By Alastair Sharp
    TORONTO, Dec 31 (Reuters) - The Canadian dollar strengthened
slightly on Monday, with healthy Chinese manufacturing data
taking some sting out of worries about the United States as
politicians there hold last-minute talks to avoid a fiscal
crunch of spending cuts and tax hikes. 
    A survey of China's vast manufacturing sector showed it had
grown in December at its fastest pace since May 2011, pointing
to a possible rebound after its slowest year of expansion since
1999. China's appetite for raw materials
provides a boost to Canadian resource companies.
    But Canada still depends most on the United States for its
exports, meaning that the risk of a politically induced
recession there weighs heavily on the currency. 
    "The No. 1 hurdle that investors are trying to get over is
the fiscal cliff situation in the U.S.," said Joe Manimbo,
senior market analyst at Western Union Business Solutions in
    U.S. politicians have yet to reach a deal to avert the
"fiscal cliff" and have only a few hours of legislative time
scheduled in which to act if an agreement materializes.
    "Depending on how we clear that hurdle, successfully or not,
that should set the tone for growth currencies and overall risk
sentiment," Manimbo added.
    At 9:47 a.m. (1447 GMT) the Canadian dollar was
trading at C$0.9953 to the greenback, or $1.0047, compared with
C$0.9965, or $1.0035, at Friday's North American close.
    The Canadian dollar is likely to trade between C$0.9886 and
C$0.9990, near its 100- and 200-day moving averages, Scotiabank
analysts wrote in a note to clients.
    The currency is in track to record a 2.1 percent gain
against the U.S. currency. 
    The two-year bond was off 3 Canadian cents to
yield 1.140 percent, while the benchmark 10-year bond
 fell 27 Canadian cents to yield 1.798 percent.