* C$ touches low of 82.04 U.S. cents
* Threat of swine flu knocks equity markets
* Bond prices higher as equities weak
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TORONTO, April 27 (Reuters) - Canada’s currency traded little changed to weaker on Monday as concerns about swine flu raised risk aversion and sent investors into the U.S. dollar, which is considered a safer bet in times of uncertainty.
The threat of a flu pandemic created new concerns about the state of the global economy as the virus, which has killed more than 100 people in Mexico spread throughout North America and was confirmed to have reached Europe. [ID:nN27484099]
The Canadian currency dropped as low as C$1.2189 to the U.S. dollar, or 82.04 U.S. cents before rebounding.
At 9:22 a.m. (1322 GMT), the Canadian unit was little changed at C$1.2099 to the U.S. dollar, or 82.65 U.S. cents, down slightly from Friday’s close of C$1.2097 to the U.S. dollar, or 82.67 U.S. cents.
“For a change it’s not the financial markets or the economic crisis that’s weighing on the market, but it’s the pig flu concerns that is weighing on sentiment,” said Matthew Strauss, senior currency strategist at RBC Capital Markets.
“It’s the potential epidemic that’s weighing on the market and consequently (the Canadian dollar) is selling off as one would expect if risk aversion increases.”
Canada on Sunday confirmed six cases of swine flu, two in its western province of British Columbia and four in the Atlantic province of Nova Scotia. [ID:nN26394797]
“It adds a downside risk to the economic outlook,” said Sal Guatieri, senior economist BMO Capital Markets.
“For the Canadian dollar, that means downside risk for commodity prices that would tend to weigh on our currency more than some others.”
Oil prices, a key Canadian export, slumped more than 6 percent toward $48 a barrel amid fears swine flu could hurt the economy [ID:nSYD459691], while gold prices were also lower.
Canadian bond prices were higher across the curve alongside the bigger U.S. Treasury market as investors opted for more secure assets as global stocks weakened given the outbreak of swine flu.
“It’s just greater uncertainty about the outlook because of the threat of swine flu and that tends to spur safe-haven buying of Treasuries and U.S. dollars,” said Guatieri.
The two-year Canada bond was up 6 Canadian cents at C$100.61 to yield 0.955 percent, while the 10-year bond rose 47 Canadian cents to C$106.84 to yield 2.961 percent.
The 30-year bond was up 55 Canadian cents at C$121.95 to yield 3.732 percent. In the United States, the 30-year Treasury yielded 3.8340 percent. (Reporting by Jennifer Kwan and Frank Pingue; Editing by Jeffrey Hodgson)
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