C$ hits 3-week low as U.S. yields extend climb

TORONTO (Reuters) - The Canadian dollar weakened to a three-week low against its U.S. counterpart on Wednesday as oil and stock prices fell, while the greenback added to recent gains against a basket of major currencies.

A Canadian dollar coin, commonly known as the "Loonie", is pictured in this illustration picture taken in Toronto January 23, 2015. REUTERS/Mark Blinch

The U.S. dollar .DXY notched a four-month high, boosted by a rise in benchmark U.S. Treasury yields above 3 percent.

Investors worry that increased borrowing costs could slow global growth, denting prospects for stocks and commodity-linked currencies such as the Canadian dollar.

The price of oil, one of Canada’s major exports, fell as rising U.S. fuel inventories and production weighed on an otherwise bullish market.

U.S. crude CLc1 prices were down 0.2 percent at $67.59 a barrel.

At 9:24 a.m. EDT (1324 GMT), the Canadian dollar CAD=D4 was trading 0.3 percent lower at C$1.2878 to the greenback, or 77.65 U.S. cents. The currency touched its weakest level since April 3 at C$1.2897.

The loonie has declined 2.5 percent since the Bank of Canada last week held its benchmark interest rate steady at 1.25 percent and said it did not know when or how aggressive it would need to be to keep inflation in check.

Bank of Canada Governor Stephen Poloz and Senior Deputy Governor Carolyn Wilkins are due to appear before the Senate Standing Committee on Banking, Trade and Commerce at 4:15 p.m. EDT (2015 GMT).

U.S. President Donald Trump said on Tuesday a new North American Free Trade Agreement could be agreed on quickly, as Canada hailed progress on forging new rules for the auto industry, the pivotal issue in talks to revamp the 24-year-old accord.

Canada sends about 75 percent of its exports to the United States. Its economy could benefit from a NAFTA trade deal.

Canadian government bond prices were slightly lower across much of the yield curve, with the two-year CA2YT=RR down 0.5 Canadian cent to yield 1.922 percent and the 10-year CA10YT=RR falling 4 Canadian cents to yield 2.361 percent.

The 10-year yield touched its highest intraday since Feb. 15 at 2.376 percent.

Reporting by Fergal Smith; editing by Jonathan Oatis