* Canadian dollar falls 0.5 percent against the greenback
* Price of U.S. oil declines 3.1 percent
* Canadian bond prices trade mixed across flatter yield curve
* Spread between 2- and 5-year yields turns negative
* Canada-U.S. 10-year spread widens by 2.5 basis points
By Fergal Smith
TORONTO, Dec 10 (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Monday, as the delaying of a key Brexit vote weighed on risk appetite and the spread between Canada's two- and five-year yields turned negative for the first time since September 2007.
British Prime Minister Theresa May postponed a parliamentary vote on her Brexit deal to seek more concessions, but the European Union refused to renegotiate and lawmakers doubted her chances of winning big changes. the UK not had the push-off on the vote, we think USD-CAD would be back below 1.33," said Andrew Sierocinski, foreign exchange analyst at Klarity FX. "It's just the risk-off sentiment in the market that's kicking the loonie back lower here."
The price of oil, one of Canada's major exports, fell in line with further declines in global stock markets, erasing the gains made last week when major producers agreed to cut their crude output from January. crude oil futures CLc1 settled 3.1 percent lower at $51.00 a barrel.
Canada's five-year yield fell 0.6 basis points below the two-year yield. A flat or inverted yield curve could reduce the incentive for banks to lend and hinder investment in the multi-year projects that tend to boost the speed at which an economy can grow. 3:35 p.m. (2035 GMT), the Canadian dollar CAD=D4 was trading 0.5 percent lower at 1.3400 to the greenback, or 74.63 U.S. cents.
On Thursday, the currency touched its weakest level in nearly 18 months at 1.3445 after the Bank of Canada suggested the pace of future interest rate hikes could be more gradual. data on Friday showed that Canada added a record number of jobs in November and the unemployment rate dipped to a new all-time low, a performance that analysts said should help ease the Bank of Canada's worries about a recent economic slowdown. Canadian Mortgage and Housing Corporation (CMHC) said on Monday that the seasonally adjusted annualized rate of Canadian housing starts increased to 215,941 units from a revised 206,753 units in October. Economists had expected starts to fall to 198,000. government bond prices were mixed across a flatter yield curve. The 10-year CA10YT=RR climbed 19 Canadian cents to yield 2.052 percent
The gap between the 10-year yield and its U.S. equivalent widened by 2.5 basis points to a spread of nearly 80 basis points in favor of the U.S. bond.