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* C$ falls to C$0.9813 to the U.S. dollar, or $1.0191
* Drops as low as C$0.9829, lowest level since June 3
* Bonds mostly firmer as risk-off sentiment returns
* Canada two-year bond auction nets decent demand (Updates to close)
By Ka Yan Ng
TORONTO, June 15 (Reuters) - The Canadian dollar tumbled more than a penny to its lowest point in 1-1/2 weeks on Wednesday, pressured by weak Canadian and U.S. data and renewed concerns that the Greek debt crisis could escalate.
Meantime, government bond prices rallied across the curve in a flight to safety.
Falling in tandem with stock markets and commodity prices, the Canadian dollar dropped as much as 1.47 cents from the previous close to C$0.9829 to the U.S. dollar, or $1.0174, its lowest level since June 3.
That was also not far off C$0.9850, which traders said they were eyeing as a key level that, if broken, could spawn another leg of Canadian dollar weakness.
"That's a big level for dollar/Canada," said Fergal Smith, managing market strategist at Action Economics.
Data on Wednesday showed the U.S. economy is facing a troubling mix of higher prices and weak growth. Underlying U.S. inflation rose to its highest level in nearly three years in May, while a regional factory gauge posted a surprise contraction this month. [ID:nN15281293]
The picture was also soft in Canada as manufacturing sales slipped 1.3 percent in April, as expected, reversing much of March's gains, as the Japanese earthquake cut off supplies to the auto industry. [ID:nN15132944]
Euro zone finance ministers failed to agree on how to make private creditors contribute to a second bailout for Greece. A senior Greek government source said Prime Minister George Papandreou told the head of the conservative opposition he would be willing to step down and make way for a national unity government. [ID:nLDE75E0JC]
"It's becoming increasingly difficult to get a handle on gauging the temperature of global risk," said Jack Spitz, managing director of foreign exchange at National Bank Financial.
Bank of Canada Governor Mark Carney gave no clear signal the bank was prepared to raise its benchmark interest rates any time soon to address housing prices that are now 13 percent above their pre-crisis peak. He was speaking in Vancouver on the country's housing market. [ID:nN15199122]
The currency CAD=D4 closed at C$0.9790 to the U.S. dollar, or $1.0215, down from Tuesday's North American finish of C$0.9689 to the U.S. dollar, or $1.0321.
The interest rate-sensitive two-year bond CA2YT=RR jumped 16 Canadian cents to yield 1.414 percent, while the 10-year bond CA10YT=RR gained C$1.01 to yield 2.951 percent.
Canada's sale of two-year government bonds met with decent demand, though the bid-to-cover ratio was the lowest this year. [ID:nN15271648] (Additional reporting by Solarina Ho; editing by Peter Galloway)