UPDATE 1-Canadian rates seen firm through 2008

 (Adds details, quotes)

 By Cameron French

 TORONTO, Aug 29 (Reuters) - Canada's primary securities
dealers expect the Bank of Canada to leave its key interest
rate steady next week, and likely through the end of the year,
as inflation is seen persistent despite slow economic growth.

 Eleven of Canada's 12 dealers surveyed by Reuters forecast
the central bank will leave its overnight rate at 3 percent on
Sept. 3. One dealer expects a quarter percentage point cut.

 Eleven dealers forecast the rate will also remain unchanged
at the October decision date, and all but one expect the same
in December.

 "It would be quite dangerous for the Bank of Canada to
start fooling around with that (interest rate cuts), because
inflation is still sticky," said Carlos Leitao, chief economist
at Laurentian Bank of Canada.

 "Credit growth is still fairly hot here, so I think the
bank would be playing with fire by cutting rates at this
stage," he said.

 The poll was taken after Statistics Canada said the economy
expanded by a weaker than expected 0.3 percent in the second
quarter, after contracting by 0.8 percent in the first three
months of the year.

 "Over time, it looks like growth is going to remain weak,
slack is going to build and the risk on inflation is tilting to
the downside. but I think it's premature for the central bank
to signal the all-clear," said David Wolf, chief Canadian
economist at Merrill Lynch.

 Nine of the dealers polled said they believe the next move
by the bank will come before the end of the first half of 2009
and most say that with the economy softening, that move will
likely be a cut.

 "The door's opening for a rate cut. The risks have changed
and shifted to the downside," said Sal Guatieri, senior
economist at BMO Capital Markets.
 (Reporting by Cameron French, additional reporting by John
McCrank; editing by Rob Wilson)