03/12/2012 08:50 EDT | Updated 05/12/2012 05:12 EDT

Canadian dollar closes lower: commodities give back gains amid weak Chinese data

TORONTO - The Canadian dollar closed lower amid a drop in commodity prices along with disappointing data from China.

The currency was off 0.18 of a cent to 100.74 cents US.

China reported its biggest monthly trade deficit in at least a decade in February as imports rebounded after a Lunar New Year holiday slowdown in January. But the combined figures for both months showed growth in imports and exports decelerating markedly.

China, the world's second-biggest economy, has been a major prop for a global economy still recovering from the 2008 financial crisis.

The April crude contract on the New York Mercantile Exchange was down $1.06 to US$106.34 a barrel. Reports of slowing Chinese growth often result in a short-term selloff in commodities.

Copper dipped two cents to US$3.84 a pound while bullion was off $11.70 at US$1,699.80 an ounce.

Commodity prices had run ahead the previous three sessions. Lower inflation raised hopes that the Chinese government might embark on further measures to stimulate the economy while traders also welcomed data showing the U.S. economy created more than 200,000 jobs for a third month in a row in February.

Merger and acquisition news gave some lift to the loonie on Monday as traders took in a possible multibillion-dollar deal in the resource sector.

The Sunday Telegraph reported that Viterra Inc., Canada’s largest publicly traded grain handler, had received an offer from Swiss commodities firm Glencore PLC worth C$5.5 billion. Glencore declined to provide any comment on the reports to The Canadian Press.

The Canadian dollar has been supported in the past by big corporate deals.

That is because a foreign buyer acquiring a Canadian company will need Canadian currency to close the deal, boosting demand for the loonie on financial markets.

Traders looked forward to more data this week to show that the U.S. economy continues on a steady but slow recovery.

The U.S. Federal Reserve makes its next scheduled announcement on interest rates on Tuesday. The central bank will keep rates near zero and likely not embark on any further measures to stimulate the economy.

Traders also looked to the release of U.S. February retail sales Tuesday with economists looking for a gain of 1.2 per cent. American industrial production numbers are out on Friday and the consensus has called for a 0.5 per cent improvement over the previous month.

Meanwhile, in Canada, investors hope that Statistics Canada will report a 1.2 per cent gain in manufacturing sales for January on Friday.