* Canadian dollar weakens 0.2% against the greenback * Canadian factory sales decrease by 0.7% in December * Price of U.S. oil declines 1.9% * Canadian bond yields fall across the yield curve TORONTO, Feb 18 (Reuters) - The Canadian dollar weakened to a near one-week low against its U.S. counterpart on Tuesday as economic damage from the coronavirus weighed on investor sentiment and domestic data showed a surprise decline in manufacturing sales. Canadian factory sales decreased by 0.7% in December from November, the fourth consecutive monthly decline, on lower sales in motor vehicle assembly, as well as aerospace products and parts, Statistics Canada said. Economists had expected a 0.5% increase. World stocks markets were knocked off record highs as two of the world's mega companies, and Europe's largest economy, Germany, reported damage from the coronavirus outbreak. Canada is a major producer of commodities, including oil, so its economy could be hurt by a slowdown in the global economy. U.S. crude oil futures were down 1.9% at $51.08 a barrel, pressured by concerns over the impact on oil demand from the coronavirus and a lack of further action by OPEC and its allies to support the market. At 9:29 a.m. (1429 GMT), the Canadian dollar was trading 0.2% lower at 1.3268 to the greenback, or 75.37 U.S. cents. The currency touched its weakest intraday level since last Wednesday at 1.3278. Speculators have cut their bullish bets on the Canadian dollar to a seven-week low, data from the U.S. Commodity Futures Trading Commission and Reuters calculations showed on Friday. As of Feb. 11, net long positions had fallen to 9,705 contracts from 18,563 in the prior week. Canadian government bond yields were lower across the yield curve in sympathy with U.S. Treasuries on Tuesday. The 10-year yield fell 3.2 basis points to 1.332%. Canada's inflation report for January is due on Wednesday, which could help guide expectations for the Bank of Canada interest rate outlook. Money markets see about a 50% chance that the central bank would ease as soon as April. (Reporting by Fergal Smith; Editing by Steve Orlofsky)
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