* C$ weaker at 89.28 U.S. cents
* Domestic housing starts rise in May
* Bonds mostly lower; follow U.S. Treasuries (Adds details, quote)
By Jennifer Kwan
TORONTO, June 8 (Reuters) - The Canadian dollar fell slightly against the greenback on Monday morning as global equities dropped on speculation the U.S. Federal Reserve may raise rates sooner than anticipated and the price of oil fell on a stronger U.S. dollar.
World stocks fell on Monday as yields on 10-year U.S. Treasuries hit a seven-month high and the U.S. dollar strengthened on speculation the Federal Reserve may have to tighten interest rates sooner than anticipated following U.S. jobs data late last week. [MKTS/GLOB]
U.S. stocks opened lower on Monday after three weeks of gains. [ID:nN08318866]
Friday's stronger-than-expected U.S. jobs data helped to fueled speculation about rate moves by the Federal Reserve, said Paul Ferley, assistant chief economist, Royal Bank of Canada.
"The smaller than expected drop in U.S. employment on Friday seems to have bolstered confidence in the recovery taking shape going forward. With that, expectations are growing that maybe at some point the Fed is going to have to start reversing the earlier rate cuts," he said.
In turn, the jobs data have helped to fuel speculation the U.S. Federal Reserve may increase interest rates sooner than what was priced into the curve, pushing up yields and boosting the U.S. currency, said George Davis, chief technical strategist at RBC Capital Markets.
At 9:15 a.m. (1315 GMT), the Canadian currency was at C$1.1201 to the U.S. dollar, or 89.28 U.S. cents, slightly down from C$1.1190 to the U.S. dollar, or 89.37 U.S. cents at Friday's session close.
Also weighing on the Canadian unit was the price of oil CLc1, which fell towards $67 a barrel on Monday as a stronger dollar prompted a retreat from a high above $70 hit last week. [ID:nSP162458]
Canadian housing starts rose 9.2 percent in May, slightly better than expected, and was broadly based and encompassed both single and multiple segments, the Canada Mortgage and Housing Corp (CMHC) said on Monday. [ID:nN08273370]
However, the Canadian dollar was largely unaffected by the data, economists said.
BONDS MOSTLY LOWER
Canadian bond prices were mostly lower, in line with U.S. Treasuries where the two-year U.S. Treasury yields hit seven-month highs in Europe on Monday.[ID:nL8475367]
"The Canadian market is following the trend set in the U.S." said Ferley.
The benchmark two-year government bond down 12 Canadian cents to C$99.84 to yield 1.332 percent, while the 10-year bond fell 15 Canadian cents to C$102.45 to yield 3.457 percent.
The 30-year bond climbed 30 Canadian cents to C$117.40 to yield 3.965 percent. The comparable U.S. Treasury issue yielded 4.6179 percent. (Reporting by Jennifer Kwan; Editing by Theodore d'Afflisio)