CANADA FX DEBT-C$ sinks to 3-week low on EU summit doubt

* C$ ends at C$1.0328 vs US$, or 96.82 U.S. cents
    * Markets focused on Europe Union summit
    * Bonds prices edge higher

    By Jennifer Kwan
    TORONTO, June 28 (Reuters) - Canada's dollar fell to a
three-week low on Thursday against the U.S. currency, with
investors doubtful that a major European Union summit would
produce new measures to stem the region's debt crisis.
    Pessimism pushed the euro to its lowest level in more than
three weeks, while investors dumped Spanish and Italian debt and
pushed yields above the 6.25-percent mark as the meeting in
Brussels began. 
    "All eyes are on Europe. Until we get a clearer announcement
from Europe risk aversion continues to be the dominant trading
factor," said Dean Popplewell, chief currency strategist at
    "We're looking for a stronger financial system ... some
pledge towards growth, some sort of debt relief, further debt
relief for the periphery countries," he said.
    Popplewell said without such pledges the Canadian currency
could fall to a low of C$1.05 against the U.S. currency in the
near term.
    The Canadian currency ended at C$1.0328 to the
greenback, or 96.82 U.S. cents, after touching a low of
C$1.0363, its weakest since June 6. The currency finished
Wed nesday's No rth American session at C$1.0255 to the greenback,
or 97.51 U.S. cents.
    European finance officials were working on urgent measures
to ease financial market pressure on Spain and Italy, which are
too big to bail out, as EU leaders began a summit on Thursday
deeply divided over how to resolve the euro zone's debt
    Matt Perrier, director of foreign exchange sales at BMO
Capital Markets, said the weakness in the currency reflected
market doubt the meeting will produce significant measures. 
    "The likelihood of any concrete, actionable outcome from the
summit is probably fairly low in people's minds," said Perrier.
    "The markets are a little softer here on anticipation we'll
just get more of the same lip service to the problem."    
    The Canadian dollar underperformed against major currencies
including the commodity-linked Australian and New Zealand
dollars, and the euro.
    But it wasn't all gloom from Europe. North American factors
also soured the broader market mood.
    Wall Street losses accelerated after a divided U.S. Supreme
Court backed the centerpiece of President Barack Obama's
signature healthcare overhaul law. The decision surprised many
investors, who see the law as a hallmark of a business
unfriendly administration.  
    Canadian bond prices were higher across the curve, following
moves in U.S. Treasuries, which climbed as investors favored
safety on the uncertain outcome of the European summit. 
    The two-year Canadian government bond edged 5
Canadian cents higher to yield 0.967 percent, while the
benchmark 10-year bond added 37 Canadian cents to
yield 1.686 percent.