* C$ down at C$1.0049 vs US$, or 99.51 U.S. cents * Bond prices edge up across curve By Claire Sibonney TORONTO, May 9 (Reuters) - The Canadian dollar tumbled to its lowest level in nearly a month on Wednesday, back below parity against the U.S. dollar as political disarray in Greece and the rising costs of fixing Spain's banks fueled fears that Europe's debt crisis was worsening. The market's immediate attention was on Athens where efforts to form a government were expected to fail, putting its ability to meet the terms of its bailout deal in doubt and raising the possibility of Greece being forced out of the euro. Meanwhile, Spain will demand banks set aside another $45 billion against loans to builders as it battles to rebuild confidence, sources told Reuters. Huge bank losses have raised fears the country may need an international bailout. "It's Europe by and large ... it all lends itself to a market that is led and dominated by the flight to quality and flight to liquidity flow that we see in times like this," said Jack Spitz, managing director of foreign exchange at National Bank Financial. "The market is looking to buy the U.S. dollar, buy the yen. Back to rumors, back to speculation about how bad things can get, rather than how good things can get, so 'the glass is half empty' is really the sentiment that the market seems to be taking from what's going on in Europe." At 7:52 a.m. (1152 GMT), the Canadian dollar stood at C$1.0049 versus the U.S. dollar or 99.51 U.S. cents, down from Tuesday's North American session close at C$0.9983 versus the U.S. dollar, or $1.0017. Earlier the currency hit a session low of C$1.0053, its weakest level since April 11. "It's more or less the 200-day moving average. We're hearing of stops at C$1.0060-C$1.0070 but we're still trading inside the range," added Spitz, noting Canadian monthly employment data due Friday will provide further direction. Canadian bond prices edged higher, tracking firmer U.S. Treasuries amid the risk-off tone in markets. Canada's 2-year bond rose 5 Canadian cents to yield 1.200 percent, while the benchmark 10-year bond added 24 Canadian cents to yield 1.946 percent.