C$ reverses from 2-week high as oil prices slide

TORONTO: The Canadian dollar weakened against its US counterpart on Monday, pulling back from its highest in more than two weeks as oil prices fell and investors grew more worried about China's economy.

World stocks were pressured by a second straight monthly fall in profits for China's industrial firms.

Officials from China are due to visit Washington this week for the next round of trade negotiations with the United States. The trade dispute between the world's two largest economies could worsen the outlook for global growth.

Canada is running a current account deficit and exports many commodities, including oil, so its economy could be hurt by a slowdown in the global flow of trade or capital.

The price of oil fell after US companies added rigs for the first time this year, a signal that crude output may rise further. US crude oil futures were down nearly 2 percent at $52.63 a barrel.

Still, oil has rebounded about 24 percent since hitting an 18-month low in December.

At 8:58 a.m. (1358 GMT), the Canadian dollar was trading 0.3 percent lower at 1.3257 to the greenback, or 75.43 US cents. The currency's weakest level of the session was 1.3264, while it touched its strongest since Jan. 11 at 1.3204.

The 17-day high for the loonie came despite weak domestic data last week that prompted some economists to project that Canada's economy contracted in November. November gross domestic product data is due on Thursday.

Canadian government bond prices were mixed across the yield curve, with the two-year up 0.5 Canadian cent to yield 1.882 percent and the 10-year falling 1 Canadian cent to yield 1.979 percent.

The gap between Canada's 2-year yield and its US equivalent widened by 1.4 basis points to a spread of 72.9 basis points in favor of the US bond, its widest since Dec. 20.