By Chris Fournier Nov. 19 (Bloomberg) -- Canada's currency weakened for a second day as global stocks dropped, indicating investors are risk-averse and diminishing the outlook for commodities including crude oil. ``Equity markets still look extremely vulnerable at this point,'' said Ian Stannard, a senior currency strategist in London at BNP Paribas SA. ``Oil prices are continuing to move lower. This is all going to be unhelpful for the Canadian dollar.'' Stannard forecasts the currency will weaken to C$1.30 by year-end. The Canadian dollar depreciated as much as 0.9 percent to C$1.2417 per U.S. dollar, from C$1.2312 yesterday. It traded at C$1.2363 at 9:29 a.m. in Toronto. One Canadian dollar buys 80.89 U.S. cents. The MSCI World Index, a gauge of stocks in 23 developed nations, fell 1 percent to 852.58. Crude oil, which accounts for a tenth of Canada's export revenue, fell for a fourth day to as low as $53.30 a barrel. ``Recent trends are likely to remain in place overall,'' said David Watt, a senior currency strategist at RBC Capital Markets in Toronto. ``Equities do not look set for a sustained rebound. The U.S. dollar is set to eventually break higher with the associated fallout in other currencies.'' RBC Capital Markets predicts the currency will weaken to C$1.27 by year-end. Bank of Canada Governor Mark Carney, in the text of a speech he's giving today in London, said the risks to the country's economy from a global credit crisis and recession have increased in the last month and will probably lead to a further reduction in interest rates. Borrowing Costs The Bank of Canada cut borrowing costs six times in the past 12 months, lowering its overnight rate to 2.25 percent from 4.5 percent to spur the economy. Policy makers next meet Dec. 9, when they will cut borrowing costs by 50 basis points to 1.75 percent, Charmaine Buskas, senior economics strategist at TD Securities in Toronto, predicted in a Nov. 12 report. U.S. consumer prices plunged 1 percent last month, more than forecast and the most since records began in 1947. International investors sold a net C$267 million of Canadian securities in September as C$3.8 billion of net bond sales offset purchases of stocks, Statistics Canada said today in Ottawa. The yield on the two-year government bond rose 4 basis points, or 0.04 percentage point, to 1.97 percent. The price of the 2.75 percent security due in December 2010 fell 8 cents to C$101.56. The 10-year note's yield dropped 1 basis point to 3.54 percent. The price of the 4.25 percent security maturing in June 2018 climbed 7 cents to C$105.75. To contact the reporter on this story: Chris Fournier in Montreal at cfournier3@bloomberg.net

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