* C$0.9878 vs US$, or $1.0124
* C$ mostly stronger against commodity-linked peers
* Bond prices stronger across the curve
TORONTO, Sept 19 (Reuters) - The Canadian dollar was weaker on Monday against the U.S greenback as investors moved away from risk, fearing a Greek default within weeks and fallout in Europe as the debt crisis there remained unsolved.
World stocks and the euro fell sharply as international lenders told Greece that it must shrink its public sector and improve tax collection to secure a vital 8 billion euro rescue payment next month or face default. [MKTS/GLOB]
After a rare four-day rally in world stocks last week, markets fear the crisis is worsening again after Greece's prime minister canceled a U.S. trip to chair an emergency cabinet meeting at home and German Chancellor Angela Merkel suffered a regional election loss. [ID:nL5E7KI0N6]
EU finance ministers also failed to make progress on the debt crisis at the weekend, and the focus is now shifting to a conference call between Greece and its international lenders at 1600 GMT to see how Greece plans to make up its budget shortfall and avoid a disorderly default. [ID:nLDE78G00Z]
"There has been a move in general risk appetite that has its source in the euro zone, whereby there was some disappointment this morning that the (EU finance ministers) meeting over the weekend didn't produce anything, so there is still an overhang of concern about Greece," said Adam Cole, global head of FX strategy at RBC Capital Markets in London.
The Canadian dollarstood at C$0.9878 to the U.S. dollar, or $1.0124 U.S. cents, down from Friday's North American session close of C$0.9790 to the U.S. dollar, or $1.0215 U.S. cents.
The weaker open against the U.S. dollar came as the European debt fears drove investors to the relative safety and liquidity of the U.S. dollar. Against most other commodity-linked currencies, the Canadian dollar was stronger.
Cole said the strength of the U.S. dollar was likely to help Canada's currency make gains on the crosses, particularly against other commodity-linked currencies through the session.
"Although the Canadian dollar is weaker today against U.S. dollar, it's stronger against virtually everything else, so if you continue to get this overhang of concern on Europe and a generally negative environment for risk, the net effect should be that you see Canadian dollar appreciation against Aussie dollar or Kiwi dollar or Scandinavian currencies," he said.
Bond prices were higher across the curve as government debt attracted safe-haven flows.
The two-year bondwas up 7 Canadian cents to yield 0.978 percent, while the 10-year bond was up 63 Canadian cents to yield 2.218 percent. (Editing by Jeffrey Hodgson)
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