CANADA FX DEBT-C$ turns lower as greenback shows strength

 * Drops to 96.63 US cents after hitting 2-1/2 month high

 * Bonds fall across curve
 (Recasts, adds quote)

 TORONTO, Jan 7 (Reuters) - The Canadian dollar was lower
against the U.S. dollar at midday on Thursday, pressured by a
stronger greenback and equity markets that stumbled after
recent gains.

 The U.S. dollar also firmed against the euro and yen,
underpinned by weak German and euro zone economic data as well
as by comments by Japan's new finance minister that he wanted a
weaker yen. [FRX/]

 "Broad-based U.S. dollar strength is weighing on currencies
globally," said Matthew Strauss, senior currency strategist at
RBC Capital Markets.

 At 12:07 p.m. (1707 GMT), the Canadian dollar was at
C$1.0349 to the U.S. dollar, or 96.63 U.S. cents, down from
Wednesday's finish of C$1.0325 to the U.S. dollar, or 96.85
U.S. cents.

 An oil price that sagged below $83 a barrel and softer gold
prices [O/R] [GOL/] also weighed on the commodity-linked
Canadian dollar.

 Weakness on global equity markets, which are typically a
gauge of risk appetite, ahead of key U.S. jobs data due on
Friday was also a factor in the currency's drop. [MKTS/GLOB].

 "There was a slight risk aversion bias in the market,"
Strauss said.

 "Ahead of such important data, a lot of longer-term
investors would rather wait for the data before adding to their
views or taking profit," he added.

 Early in the day, the Canadian dollar shot as high as
C$1.0291 to the U.S. dollar, or 97.17 U.S. cents, largely on
bullish hopes that U.S. and Canadian jobs data on Friday would
be another signal of economic revival.  [ID:nN0595130]

 Strauss said he expected the currency to trade in a range
between C$1.03 and C$1.04 until the release of the jobs data.

 BONDS MIXED

 Canadian bond prices were flat to slightly higher at the
short end, but lower at the longer end, mimicking U.S.
Treasuries, which firmed on Thursday ahead of the closely
watched U.S. jobs report. [US/]

 The two-year government bond CA2YT=RR ticked 2 Canadian
cents higher to C$99.77 to yield 1.376 percent, while the
10-year bond CA10YT=RR shed 35 Canadian cents to C$113.60 to
yield 4.163 percent.
 (Editing by Peter Galloway)