10/03/2011 08:36 EDT | Updated 12/03/2011 05:12 EST

Canadian dollar little changed, commodities slide amid Greek default worries

TORONTO - The Canadian dollar closed lower Monday amid sharply lower oil prices and another round of worries that Greece won't be able to avoid defaulting on its debt payments.

The loonie lost 0.26 of a cent at 95.14 cents US following a volatile week on financial markets that saw the currency lose almost two cents to the loonie's lowest level since early September 2010.

Worries about Greece came to the fore after the government said the country’s economy will remain in recession next year, causing it to miss its original deficit reduction targets.

The 2012 draft budget says Greece's debts are projected to reach 172.7 per cent of gross domestic product in 2012 while the deficit will drop to 6.8 per cent, which is above the 6.5 per cent originally agreed with international bailout creditors.

Debt inspectors from the International Monetary Fund, European Central Bank and European Commission, known as the troika, are in Athens reviewing reforms to see if Greece qualifies to receive the next €8-billion instalment of its bailout. Without it, Greece will run out of funds in mid-October.

A default would have serious repercussions for the European banking system and likely derail what is already a fragile economic recovery and send it into recession.

A stronger American dollar and demand worries sent oil well below the US$80 a barrel mark and copper prices to a 14-month low.

The November crude contract on the New York Mercantile Exchange dropped $1.59 to US$77.61 a barrel, the lowest close since Sept. 28, 2010. Prices have dropped 15 per cent this year.

The December copper contract was unchanged at US$3.15 a pound.

However, investors looking for safety pushed gold prices higher and the December bullion contract in New York gained $35.40 to US$1,657.70 an ounce.