* Canadian dollar falls 0.3% against the greenback * Loonie touches its lowest level since February 2016 at 1.3854 * Price of U.S. oil decreases 7.8% * Canadian bond yields tumble across a flatter curve TORONTO, March 12 (Reuters) - The commodity-linked Canadian dollar weakened to a four-year low against its U.S. counterpart on Thursday as investors increasingly worried that measures taken to contain the coronavirus outbreak will disrupt the world economy. At 9:49 a.m. (1349 GMT), the Canadian dollar was trading 0.3% lower at 1.3814 to the greenback, or 72.39 U.S. cents. The currency touched its weakest intraday level since February 2016 at 1.3854. Stocks globally plunged into a bear market and oil slumped after U.S. President Donald Trump banned travel from Europe to stem the spread of the virus. Canada runs a current account deficit and is a major exporter of commodities, including oil, so the loonie is sensitive to a slowdown in the global flow of trade or capital. U.S. crude oil futures were down 7.8% at $30.41 a barrel. The slump in oil is being compounded by the threat of a flood of cheap supply after Saudi Arabia and the United Arab Emirates said they would raise output in a standoff with Russia. On Wednesday, the premier of Alberta said the energy-rich Canadian province will curtail oil production if necessary to help an industry which is set to start laying off workers in response to a global price war. With the outlook for the world economy dimming and crude oil prices crashing, money markets see it as likely the Bank of Canada will cut its benchmark interest rate, which sits at 1.25%, by as much as 75 basis points at its next policy decision on April 15. Last week, the central bank eased by 50 basis points, its biggest move in more than a decade, to cushion the impact on the economy from the virus outbreak. Canadian bond yields tumbled across a flatter yield curve, with the 10-year down 20.6 basis points at 0.450%. On Monday, the 10-year yield hit a record intraday low at 0.233%. (Reporting by Fergal Smith Editing by Nick Zieminski)
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