REFILE-CANADA FX DEBT-C$ weakens as oil falls, risk appetite fades
(Corrects day to Thursday in first paragraph) * Canadian dollar at C$1.2734, or 78.53 U.S. cents * Bond prices higher across a flatter maturity curve * 10-year yield hits lowest since Feb. 29 at 1.157 percent TORONTO, June 9 (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Thursday as oil prices fell and risk appetite faded. Losses for the loonie came one day after it strengthened to a five-week high at C$1.2655 as expectations dwindled that the U.S. Federal Reserve will move to hike interest rates again soon. Oil prices fell as traders took profits after three sessions of gains, though prices remained close to their highest this year thanks to supply disruptions and a decline in U.S. crude inventories. U.S. crude prices were down 1.25 percent to $50.59 a barrel. Slippage in global stocks provided an additional headwind for the risk-sensitive commodity-linked Canadian dollar. European shares fell for a second straight day, dragged down by weakness in banking stocks as bond yields moved lower. At 9:44 a.m. EDT (1344 GMT), the Canadian dollar was trading at C$1.2734 to the greenback, or 78.53 U.S. cents, weaker than Wednesday's close of C$1.2696, or 78.76 U.S. cents. The currency's strongest level of the session was C$1.2670, while its weakest was C$1.2767. Canadian industries ran at 81.4 percent of capacity in the first quarter, up from 80.9 percent in the previous quarter and new home prices in Canada rose 0.3 percent in April from March, data from Statistics Canada showed. Canadian employment data for May will be released on Friday. The report comes after a massive wildfire last month cut production in Alberta's oil sands region. The Bank of Canada has said it expects damage from the wildfire to shave 1.25 percentage points off economic growth in the second quarter, which could put the quarter on pace for a contraction. Canadian government bond prices were higher across a flatter maturity curve in sympathy with Treasuries. The two-year price rose 4 Canadian cents to yield 0.498 percent and the benchmark 10-year climbed 42 Canadian cents to yield 1.157 percent. The 10-year yield hit its lowest since Feb. 29 at 1.157 percent. (Reporting by Fergal Smith; Editing by Meredith Mazzilli)
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