CANADA FX DEBT-C$ firms though 2014 expected to bring weakness

* Canadian dollar at C$1.0617 or 94.19 U.S. cents
    * Bond prices mostly lower across the maturity curve

    By Leah Schnurr
    TORONTO, Jan 2 (Reuters) - The Canadian dollar firmed
against the greenback on Thursday, though gains were capped by
broad strength from the U.S. currency in what was expected to be
quiet trading with some investors still on holiday.
    The Canadian dollar enters 2014 with many investors
expecting the currency to weaken in the first few months of the
year as the Bank of Canada maintains a more dovish policy stance
and as the Federal Reserve gradually winds down its U.S.
economic stimulus program.
    "It's very quiet trading," said Camilla Sutton, chief
currency strategist at Scotiabank in Toronto. "The Canadian
dollar is trading at about the average level it's been at the
last month."
    The Canadian dollar was at C$1.0617 to the
greenback, or 94.19 U.S. cents, stronger than Wednesday's North
American close of C$1.0643, or 93.96 U.S. cents, according to
Thomson Reuters data. The U.S. dollar was up 0.7 percent
against a basket of currencies.
    The Bank of Canada's official close for the Canadian
currency on Tuesday, ahead of Wednesday's New Year's Day
holiday, was C$1.0636, or 94.02 Canadian cents.
    Over the last 10 years, the Canadian dollar has ended
January softer than where it started eight times, with an
average loss of 0.6 percent, Sutton said.
    "A fairly clear seasonal pattern for January. Certainly this
year that would be in line with where our forecasts are."
    Sutton expects the Canadian dollar to weaken over the next
six months before stabilizing in the second half of the year as
a stronger U.S. economic recovery benefits Canada. A weaker
loonie should also aid the Canadian economy
    Overseas, data showed euro zone manufacturing grew at the
fastest rate since mid-2011 in December, though China's growth
remained modest. 
    Canadian government bond prices were mostly lower across the
maturity curve, with the two-year down 1-1/2 Canadian
cents to yield 1.142 percent and the benchmark 10-year
 down 1 Canadian cent to yield 2.776 percent.