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CANADA FX DEBT-Loonie hits 2-week low as rate cut bets rise on spreading virus

 (Adds strategist quotes and details throughout; updates prices)
    * Canadian dollar falls 0.5% against the greenback
    * Canadian wholesale trade rises 0.9% in December
    * Price of U.S. oil tumbles 3.7%
    * Canada's 10-year yield touches a near six-month low

    By Fergal Smith
    TORONTO, Feb 24 (Reuters) - The Canadian dollar weakened to
a near two-week low against its U.S. counterpart on Monday as
the spread of the coronavirus epidemic outside China raised
expectations that the Bank of Canada could cut interest rates as
early as next week.    
    At 5 p.m. (2219 GMT), the Canadian dollar          was
trading 0.5% lower at 1.3293 to the greenback, or 75.23 U.S.
cents. The currency, which was up 0.2% last week, hit its
weakest intraday level since Feb. 11 at 1.3308.
    "We're seeing the loonie get sold off and tread water as a
result of the ongoing concerns around what further spread of the
coronavirus looks like for global growth," said Scott Smith,
managing partner at Viewpoint Investment Partners. "I think the
BoC will be ready to act if necessary and it becomes a more long
and drawn-out situation."
    Last month, the Bank of Canada opened the door to an
interest rate cut should a recent slowdown in domestic growth
persist.             
    Chances that the bank would ease at the March 4 policy
announcement climbed to about 30% from less than 20% on Friday.
Less than a week ago, they were about l0%.               
    The price of oil       , one of Canada's major exports,
settled 3.7% lower at $51.43 a barrel, while stocks across the
globe          posted their largest decline in over two years
after a jump in coronavirus cases in Italy, South Korea, Japan
and Iran sent investors scrambling to the security of gold and
government bonds.             
    Canadian wholesale trade increased by 0.9% in December from
November on stronger sales in the motor vehicles and motor
vehicle parts and accessories subsector, Statistics Canada said.
Analysts had forecast a 0.5% increase.             
    Canada's GDP reports for December and for the fourth quarter
are due on Friday.    
    Canadian government bond yields were lower across the yield
curve on Monday in sympathy with U.S. Treasuries. The 10-year
yield             fell 8.1 basis points to 1.200%, having
touched its lowest intraday level since Sept. 4 last year at
1.170%.
    Police on Monday made 10 arrests and cleared a rail blockade
by an indigenous group in eastern Canada that had been stopping
freight and passenger traffic for almost three weeks on one of
the country's busiest lines.             

 (Reporting by Fergal Smith; Editing by Peter Cooney)
  
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