* Canadian dollar weakens 0.6% against the greenback
* Loonie touches a 2-week high intraday at 1.3487
* Price of U.S. oil falls 3.1%
* Canadian bond yields ease across much of a flatter curve
By Fergal Smith
TORONTO, July 9 (Reuters) - The Canadian dollar weakened against the greenback on Thursday as investors grew more worried that economic recovery in the United States, Canada's largest trading partner by far, could be pushed back by rising cases of COVID-19.
The loonie CAD= was trading 0.6% lower at 1.3589 to the greenback, or 73.59 U.S. cents. Earlier in the day, the currency touched its strongest intraday level in more than two weeks at 1.3487.
"This (decline) is not unwarranted from our standpoint," said Simon Harvey, FX market analyst for Monex Europe and Monex Canada. "We definitely believe that trading at 1.35, the loonie was too strong given its current economic fundamentals."
U.S. stock indexes dropped as fears of another lockdown to contain a surge in coronavirus cases overshadowed data pointing to a declining trend in weekly jobless claims. a negative risk associated with the Canadian economy because U.S. COVID cases rising potentially prolongs the U.S. recovery," Harvey said.
Canada sends about 75% of its exports to the United States, including oil. U.S. crude oil futures CLc1 settled 3.1% lower at $39.62 a barrel.
Still, data showed that Canadian housing starts climbed by 8.3% in June, adding to evidence of a rebound in the domestic economy. On Wednesday, Ottawa released a "fiscal snapshot" showing a larger-than-expected expansion in federal government spending to help bridge the downturn caused by COVID-19 shutdowns. jobs report for June is due on Friday, which could help guide expectations for further stimulus measures from the Bank of Canada. The central bank is due to make an interest rate announcement and present updated economic projections next week.
Canadian government bond yields were lower across much of a flatter curve, with the 10-year CA10YT=RR down 4.4 basis points at 0.533%.