CANADA FX DEBT-C$ weakens to July low vs US$ on euro zone fears
* C$ weakens to C$0.9681, or $1.0329
* Hits lowest level against US$ since June 30
* Touches strongest level against euro since March 14
* Equities, oil markets also trading lower
* Bond prices higher across the curve
By Trish Nixon and Solarina Ho
TORONTO, July 11 (Reuters) - The Canadian dollar weakened to the lowest level this month against the U.S. currency on Monday, as investors moved away from riskier assets on fears of contagion in Europe and a slowing global economy.
World stocks hit one-week lows and the euro slid across the board as intensifying concerns that Italy could be the next victim of the euro zone debt crisis prompted an emergency meeting of top European officials. [MKTS/GLOB]
"There seems to be some contagion with Italy. The Spain spreads are blowing out this morning as well. In that scenario, it's going to be difficult for equities to trade well, difficult for the Canadian dollar to trade well," said Darcy Browne, managing director at CIBC's capital markets trading unit.
"Equities markets are down, oil's down, and the Canadian dollar is under a little bit of pressure here."
A weaker-than-expected U.S. jobs report on Friday and data showing China's import growth fell to its slowest pace in 20 months also contributed to risk-off sentiment.
Oil, a key Canadian export, and often influential in the currency's movements, fell by more than a dollar on euro worries, while a drop in Chinese crude imports also rekindled concerns about a slowdown in demand. [O/R]
At 10:20 a.m. (1400 GMT), the currency CAD=D4 stood at C$0.9681 to the U.S. dollar, or $1.0329, down from Friday's North American finish of C$0.9607 to the U.S. dollar, or $1.0409.
Browne noted the currency was running up against some strong technical levels, hitting a session low around the 55-day moving average of C$0.9696, or $1.0314.
Should the Canadian dollar begin to rebound, Browne predicted U.S. dollar support around C$0.9620, followed by C$0.9550.
"It just seems that anytime we get down to that 95 cent level, the currency starts looking rich, based on what the real risks in the world are," he said.
Canada's dollar did strengthen against the beaten-down euro. It touched its highest point since March 14, with one Canadian dollar buying 73.83 euro cents.
Canadian bond prices were higher across the curve, as investors shed their riskier assets in favor of safe-haven government bonds.
The two-year bond CA2YT=RR was up 13.5 Canadian cents to yield 1.444 percent, while the ten-year bond CA10YT=RR rose 43 Canadian cents to yield 2.916 percent.
Short term Canadian bonds outperformed their U.S. counterparts, while long-term bonds underperformed. (Editing by Jeffrey Hodgson)
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