CANADA FX DEBT-C$ hits 9-week low as capital spending intentions slow

* Canadian dollar at C$1.2786, or 78.21 U.S. cents

* Loonie touches its weakest since Dec. 22 at C$1.2791

* Bond prices higher across a flatter yield curve

TORONTO, Feb 28 (Reuters) - The Canadian dollar weakened to a nine-week low against its U.S. counterpart on Wednesday as the greenback broadly firmed and domestic data showed a slower pace of domestic capital expenditure.

The U.S. dollar rose against a basket of major

currencies, boosted by an upbeat assessment of the U.S. economy on Tuesday by Fed Chairman Jerome Powell. The pace of capital expenditures in Canada is expected to cool in 2018 as a slowdown in spending intentions from the public sector are offset by increased investment in machinery and equipment, data from Statistics Canada showed. "Forget about Canadian businesses opening their wallets this year," Avery Shenfeld, chief economist at CIBC Capital Markets, said in a research note. In separate data, Canadian producer prices rose 0.3 percent in January, lifted by higher prices for energy and petroleum products. The increase was short of economists' forecasts for a gain of 0.5 percent. At 9:23 a.m. EST (1423 GMT), the Canadian dollar was trading 0.1 percent lower at C$1.2786 to the greenback, or 78.21 U.S. cents. The currency's strongest level of the session was C$1.2763, while it touched its weakest since Dec. 22 at C$1.2791. The modest loss for the loonie came one day after Canada's Liberal government tackled long-term growth challenges in a budget aimed at boosting women in the workforce and diversifying trade, while keeping its fiscal powder dry in case of an economic shock like the demise of the North American Free Trade Agreement. Canadian government bond prices were higher across a flatter

yield curve, with the two-year up 1.5 Canadian cents to yield 1.798 percent and the 10-year rising 14

Canadian cents to yield 2.254 percent. Canada is cutting down issuance of bonds in the 2018-19 fiscal year by 17 percent as the government runs a smaller budget deficit and market participants demand greater supply of more liquid T-bills.

U.S. crude prices were up 0.35 percent at $63.23 a

barrel. Oil is one of Canada's major exports. Figures for Canada's fourth-quarter economic growth will be released on Friday, with analysts expecting the annualized rate to come in below the Bank of Canada's 2.5 percent forecast.

(Reporting by Fergal Smith; Editing by Jonathan Oatis)