CANADA FX DEBT-C$ weakens most in 17 months as markets plunge on Brexit

(Adds analyst quote, details on CFTC data, updates prices) * Canadian dollar at C$1.2999, or 76.93 U.S. cents * Loonie falls 1.7 percent, its most since January 2015 * Currency touches its weakest since June 3 at C$1.3100 * Bond prices much higher across the maturity curve By Fergal Smith TORONTO, June 24 (Reuters) - The Canadian dollar weakened the most in 17 months against its U.S. counterpart on Friday as a plunge in global financial markets after Britain voted to leave the European Union weighed on Canada's risk-sensitive currency.

The vote to leave the European Union forced the resignation of British Prime Minister David Cameron and dealt the biggest blow to the European project of greater unity since World War Two.

Global stocks tumbled and U.S. crude prices settled $2.47 lower at $47.64 a barrel as the result raised fears of a broader economic slowdown, triggered by reduced trade, that could reduce demand.

"An export driven country like Canada has a tremendous amount to lose from a roll back in globalization," said Adam Button, a currency analyst at ForexLive.

Canada's commodity-oriented economy will suffer a blow from Britain's vote to leave the European Union, which has put the prospect of Canadian interest rate cuts back on the table.

Overnight index swaps moved to imply a 22 percent chance of a Bank of Canada rate cut this year after having been priced for no change in policy before the Brexit result.

The reaction by markets has been so "violent" because they had been priced for Britain to remain in the EU, said Patrick O'Toole, vice president, global fixed income, CIBC Asset Management.

The Canadian dollar closed at C$1.2999 to the greenback, or 76.93 U.S. cents, much weaker than Thursday's close of C$1.2772, or 78.30 U.S. cents. The currency's 1.7 percent drop was the most since January 2015, according to Thomson Reuters data.

The currency's strongest level of the session was C$1.2715, while it touched its weakest since June 3 at C$1.3100.

Speculators cut bullish bets on the loonie for the third straight week, Commodity Futures Trading Commission data showed. Net long Canadian dollar positions tumbled to 2,595 contracts in the week ended June 21 from 18,440 contracts in prior week.

Canadian government bond prices rose across the maturity curve in sympathy with Treasuries as investors rushed into safe-haven assets.

The two-year price rose 9 Canadian cents to yield 0.548 percent and the benchmark 10-year climbed 50 Canadian cents to yield 1.179 percent.

The Canada-U.S. 10-year spread shifted 11.4 basis points to -39.3 basis points, its smallest gap since May 5, as Treasuries outperformed.

(Reporting by Fergal Smith)