BUSINESS
02/10/2012 08:37 EST | Updated 04/11/2012 05:12 EDT

Loonie closes below parity amid Greek bailout snag, disappointing Chinese data

TORONTO - The Canadian dollar closed below parity with the U.S. currency Friday as Greece faced new conditions for securing a crucial bailout meant to stave off bankruptcy as early as late next month.

The loonie fell 0.72 of a cent to 99.72 cents US as traders avoided risky investments and bought into the safe haven status of U.S. Treasuries. Commodity currencies such as Canada's were also pressured by disappointing trade data from China.

Eurozone finance ministers said Thursday that Athens hadn't gone far enough with austerity package agreed after a marathon round of talks on Wednesday and Thursday. They have demanded further cuts within a week in exchange for a €130 billion bailout.

Greece has already caved in to pressing demands to fire 15,000 civil servants in 2012, slash the minimum wage and other private sector pay.

Meanwhile, China's trade suffered its biggest decline in January since the 2008 financial crisis in a new sign of weak global demand and a slowing domestic economy.

Exports fell 0.5 per cent from a year earlier to US$149.9 billion, while imports were down 15 per cent at $122.7 billion.

The import decline was sharper than expected, suggesting that even the world's second-largest economy is slowing markedly.

China is a major buyer of iron ore, oil and other commodities and industrial components, meaning any downturn could hurt suppliers such as Canada, Australia, Brazil and South Africa.

Commodity prices retreated following the data with the March crude contract on the New York Mercantile Exchange down $1.17 to US$98.67 a barrel.

The March copper contract in New York dropped 12 cents to US$3.86 a pound. Copper prices have charged ahead from around US$3.43 at the first of the year, reflecting a string of positive economic data from the U.S. and hopes that the Chinese government would be able to relax lending requirements at banks to encourage economic growth. China is the biggest consumer of the metal.

A stronger American dollar also contributed to April gold dropping $15.90 to US$1,725.30 an ounce.

A stronger greenback usually helps depress commodity prices, which are denominated in dollars, as it makes oil and metals more expensive for holders of other currencies.