* C$ drops to C$0.9918 to the U.S. dollar, or $1.0083
* Currency touches lowest level since Aug. 11
* Bond prices surge for third session on flight to safety (Adds details, background)
By Ka Yan Ng
TORONTO, Aug 18 Canada's dollar dropped to a one-week low against the U.S. currency on Thursday morning after a raft of U.S. and Canadian data did little to offset an already glum outlook for the world economy.
The nervousness, however, sent government of Canada bond prices surging for a third straight session in safe-haven gains as investors exited riskier stock markets.
The currency fell to its lowest level since Aug. 11, touching C$0.9939 to the U.S. dollar, or $1.0061, with the latest downdraft coming on the heels of data that showed U.S. factory activity in the Mid-Atlantic region plummeted in August.
The Philadelphia Federal Reserve Bank said its business activity index dropped to the lowest level since March 2009. It added to earlier soft economic news out of the United States that showed jobless claims rose in the latest week and consumer prices rose faster than expected in July. [ID:nN1E77H0E8]
Sentiment was already weighed down by the European debt crisis and persistent unease about the sluggish global recovery, which was a chief factor that sent European and North American shares lower. [MKTS/GLOB]
"The data generally didn't reverse that," said Paul Ferley, deputy chief economist at Royal Bank of Canada. "Numbers showing greater-than-expected weakness reinforce concerns about the sustainability of the recovery."
Cuts in global gross domestic product forecasts from big banks, as well as weak British retail sales data fanned growth concerns.
The price of crude oil was also down sharply on the day, which also weighed on the commodity-linked currency.
At 10:38 a.m. (1438 GMT), the Canadian dollar CAD=D4 was at C$0.9918 to the U.S. dollar, or $1.0083, down more than a penny from C$0.9797 to the U.S. dollar, or $1.0207, at Wednesday's North American close.
Canada's two-year bond CA2YT=RR jumped 31 Canadian cents to yield 0.827 percent, while the 10-year bond CA10YT=RR advanced C$1.02 to yield 2.278 percent.
Investors were unswayed by Canadian economic data released on Thursday, which showed a rise in July's leading indicator, a predictor of economic trends, while June wholesale trade also rose. [ID:nN1E77H046] [ID:nN1E77H09D] (Reporting by Ka Yan Ng; editing by Rob Wilson)