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* C$ at C$1.0040 vs US$, or 99.60 U.S. cents * Bond prices edge higher across curve By Claire Sibonney TORONTO, May 14 (Reuters) - The Canadian dollar fell against its U.S. counterpart on Monday as higher yielding currencies were pressured by mounting political uncertainty in Greece and worries about slowing Chinese and global growth. Problematic negotiations on forming a new Greek government have increased the chances it will be unable to meet the conditions of its bailout deal and be forced to exit the euro zone, while a worsening fiscal position in Spain has added to the sense of crisis facing the region. "Europe is definitely driving things," said Mark Chandler, head of fixed income and currency strategy at RBC Capital Markets. He said there were "continued worries after ECB officials had talked about the potential exit of Greece from the euro." In Germany Chancellor Angela Merkel's conservatives suffered a crushing defeat on Sunday in an election in the country's most populous state, a result which could embolden the left opposition to step up attacks on her European austerity policies. This added to growing concerns of a global economic slowdown triggered by last week's lackluster industrial output data from China, weighing on commodity prices. At 8:06 a.m. (1206 GMT), the Canadian dollar stood at C$1.0040 versus the U.S. dollar, or 99.60 U.S. cents, down from Friday's C$1.0009 versus the U.S. dollar, or 99.91 U .S. cents. Chandler said markets were little moved by China's bank reserve ratio cut over the weekend. "To be honest, earlier in the year you would have thought that that would have helped riskier assets, but it just didn't seem to provide much support at all," he said. Canadian bond prices climbed across the curve. The two-year government bond rose 7 Canadian cents to yield 1.266 percent, while Canada's 10-year bond jumped 47 Canadian cents to yield 1.920 percent.