March 20, 2020 / 8:35 PM / 20 days ago

WRAPUP -TSX extends weekly decline, loonie rally ebbs as economic outlook dims

    * Canadian dollar rises 0.7% against the greenback
    * Toronto stock market closes down 2.6%
    * Price of U.S. oil decreases 10.7% 
    * Canadian bond yields fall across a flatter curve

    By Fergal Smith
    TORONTO, March 20 (Reuters) - Canada's main stock market
fell and the loonie gave back much of its earlier gains on
Friday, with both down sharply for the week, as global efforts
to contain the spread of the coronavirus pandemic weighed on the
economic outlook.
    New York and California imposed tough new restrictions,
limiting the activity of 60 million people in the two states to
curb the spread of the virus, while Canadian Prime Minister
Justin Trudeau said that he expected the closure of the
U.S.-Canada border to take effect overnight.
                            
    Canada is set to ramp up borrowing as Ottawa's C$27 billion
stimulus package, announced this week to stave off a potential
recession, blows out the fiscal deficit, market strategists
said.             
    The Toronto Stock Exchange's S&P/TSX composite index
          closed down 2.6% at 11,851.56. For the week, the index
was down 13.6%, its fifth straight weekly decline.
    The materials group            shed 5.7% on Friday as shares
of gold miners declined, while the heavily weighted financials
sector was down 3.6%.
    Six major central banks announced a coordinated action to
enhance liquidity in the U.S. dollar by increasing the frequency
of their currency swap operations. That initially helped the
loonie but the pause in the scramble for the greenback was
short-lived.             
    "We're giving back the gains in NY trade today as the Fed
goes berserk with even more emergency measures," said Erik
Bregar, head of FX strategy at Exchange Bank of Canada. "You
know it's bad out there in short-term money markets when they
have to keep coming out like this."
    The Canadian dollar          strengthened 0.7% to 1.4414 per
U.S. dollar, or 69.38 U.S. cents. The currency, which on
Thursday hit a four-year low at 1.4669, traded in a range of
1.4150 to 1.4538.
    For the week, the loonie was down 4.2%, its biggest decline
since September 2011.
    The price of oil, one of Canada's major exports, fell as
global demand dried up due to the virus. U.S. crude oil futures
       settled 10.7% lower at $22.53 a barrel.
    Speculators have raised their bearish bets on the Canadian
dollar, data from the U.S. Commodity Futures Trading Commission
showed.
    Canadian government bond yields fell across a flatter yield
curve in sympathy with U.S. Treasuries. The 10-year yield
            was down 11.6 basis points at 0.882%.
    Canadian retail sales grew by 0.4% in January from December,
Statistics Canada said. Analysts had forecast a 0.3% increase.
                

 (Reporting by Fergal Smith; editing by Cynthia Osterman)
  
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