* C$ slips to 95.96 U.S. cents
* Weak U.S. data ups concerns about recovery
* Bonds gain in safety bid (Updates to midmorning)
By Ka Yan Ng
TORONTO, July 15 (Reuters) - The Canadian dollar slipped close to one-week low against the U.S. dollar on Thursday as weak U.S. data renewed concerns about the strength of the economic recovery.
Sentiment turned sour after a gauge of factory activity in New York state fell sharply, while first-time applications for U.S. jobless benefits edged down. [ID:nN15208925]
The currency fell further to its weakest level since July 9 after a lower than expected reading in the Federal Reserve Bank of Philadelphia's index of business conditions in the U.S. Mid-Atlantic region for July. [ID:nEAH104F00]
At 10:50 a.m. (1450 GMT), the Canadian dollar CAD=D4 was at C$1.0421 to the U.S. dollar, or 95.96 U.S. cents, down sharply from Wednesday's close at C$1.0341 to the U.S. dollar, or 96.70 U.S. cents.
"It's a reversion back to more longer-term fundamentals and based on the weakening sentiment with respect to U.S. economics," said Jack Spitz, managing director of foreign exchange at National Bank Financial.
"Money is flying out of the States and back into euro, away from commodities and away from commodity-related currencies."
The data came the day after minutes from a U.S. Federal Reserve meeting showed policymakers felt they should stand ready to do more to boost the economy if the outlook worsens for Canada's largest trading partner.
The data also helped wipe out early gains the currency made on the back of positive investor sentiment after JPMorgan's second-quarter profit beat expectations and fed into firmer equity markets.
The soft data also weighed on commodity prices, notably the price of oil, which dropped below $76 a barrel. Canada is the No. 1 exporter of oil to the United States. [O/R]
The swing lower may not last too long but could see the currency hit C$1.05 to the U.S. dollar, said John Curran, senior vice-president at CanadianForex, who said knee-jerk reactions tend to get overdone.
"While it's concerning that these numbers are poor, I don't think these huge swings are necessarily going to last," he said, citing generally positive Canadian data.
Canadian government bond prices followed their U.S. counterparts higher on Thursday morning after the weak data put the relatively safety of government debt back in the spotlight.
Market players largely shrugged aside Canadian manufacturing sales for May, which rose by 0.4 percent from April and at twice the rate expected. [ID:nN15195040]
The next key Canadian-driven event for the market will be the Bank of Canada's interest rate announcement on July 20, and market expectations are leaning toward a rate increase.
Canadian primary dealers and global forecasters surveyed by Reuters expect the bank will raise its key overnight interest rate next week by 25 basis points to 0.75 percent, though the pace of subsequent hikes is less clear. [CA/POLL]
The two-year bond CA2YT=RR was up 8 Canadian cents to yield 1.674 percent, while the 10-year bond CA10YT=RR increased 28 Canadian cents to yield 3.231 percent. (Additional reporting by John McCrank; editing by Rob Wilson)