CANADA FX DEBT-C$ falls amid lower oil prices, selloff in risky assets
* Canadian dollar at C$1.3972 or 71.57 U.S. cents * Bond prices higher across the maturity curve * Canada 10-year yield at record low of 0.921 percent TORONTO, Feb 11 (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Thursday as a drop in crude oil prices and selloff in global stocks weighed on the risk-sensitive commodity-linked currency. Losses against safe-haven currencies such as the Japanese yen and the Swiss franc were deeper. Federal Reserve Chair Janet Yellen on Wednesday highlighted the growing risks that face the U.S. economy. A renewed slump in banking and mining stocks weighed on European markets. Markets have worried this week that negative rates have hit banks' ability to earn margins on interest rates. Oil slid 2 percent, dented by record U.S. crude inventories, worries about the demand outlook and a Goldman Sachs forecast that prices would remain low and volatile until the second half of the year. At 9:31 a.m. EST (1431 GMT), the Canadian dollar was trading at C$1.3972 to the greenback, or 71.57 U.S. cents, weaker than the Bank of Canada's official close of C$1.3933, or 71.77 U.S. cents, on Wednesday. The currency's strongest level of the session was C$1.3884, while its weakest was C$1.4013. Against the yen, the Canadian dollar touched its lowest since Jan. 20 at 79.27 yen. Domestic data had little impact. New home prices edged up 0.1 percent in December from November, a smaller increase than expected. Compared with December 2014, prices grew by 1.6 percent. Canada's job vacancy rate fell to 2.6 percent in the third quarter, down from 2.8 percent in the second quarter. Canadian government bond prices were higher across the maturity curve on the flight to safety. The two-year price rose 4 Canadian cents to yield 0.335 percent and the benchmark 10-year was up 19 Canadian cents to yield 0.979 percent. The 10-year yield hit a new record low at 0.921 percent after having dropped below 1 percent for the first time ever on Wednesday. The Canada-U.S. two-year bond spread was 5.1 basis points less negative at -29.5 basis points, while the 10-year spread was 7.8 basis points less negative at -63.1 basis points as Treasuries outperformed. The Canadian government is talking to the country's largest pension funds about investing in billions of dollars worth of infrastructure projects to help stimulate the economy, the Infrastructure Ministry told Reuters on Wednesday. (Reporting by Fergal Smith; Editing by Bernadette Baum)
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