By Mary Childs and Chris Fournier June 4 (Bloomberg) -- The Canadian currency slid for a second day as concern Europe’s sovereign-debt crisis will worsen overshadowed stronger-than-forecast employment data. The Canadian currency, known as the loonie, rose as much as 0.4 percent after a government report showed employers added 24,700 jobs last month, more than the 15,000 median forecast in a Bloomberg News survey. The loonie reversed gains as the euro fell to its lowest level since April 2006. Shares of Societe Generale SA declined on reports that cited speculation the bank may face losses on derivatives and a government spokesmen said Hungary is in a “very grave situation.” “The rising bond yields and CDS levels in Europe is a real concern, highlighting that there still is ongoing trouble in Europe,” said Camilla Sutton, director of currency strategy in Toronto at Bank of Nova Scotia, Canada’s third-largest lender. “That’s the key driver today.” The Canadian dollar fell 0.4 percent to $1.0448 per U.S. dollar at 8:10 a.m. in Toronto, from C$1.0402 yesterday. One Canadian dollar buys 95.71 U.S. cents. The Stoxx Europe 600 Index slid, led by a selloff in banks, after a spokesman for Hungarian Prime Minister Viktor Orban said the previous government manipulated figures and lied about the state of the economy. SocGen declined to comment on reports of derivative concerns. The bank’s shares fell as much as 7.2 percent in Paris trading today. “If we had something to say, we would have already communicated,” said Laura Schalk, a Paris-based spokeswoman. Bank of Canada Crude oil, Canada’s biggest export, dropped 37 cents, or 0.4 percent, erasing earlier gains. The loonie tends to follow movements in stocks and commodities. May’s jobs gain follows a record 108,700 jump in April, Statistics Canada said today in Ottowa. Canada’s unemployment rate was unchanged at 8.1 percent. Canada’s currency had gained 1.5 percent since June 1, when the Bank of Canada raised its target lending rate by a quarter- percentage point to 0.5 percent, becoming the first Group of Seven central bank to increase borrowing costs since July 2008. Governor Mark Carney indicated future increases may be delayed as a result of Europe’s sovereign-debt crisis. The loonie touched C$1.0853 on May 25, the weakest level since November, as investors sold higher-yielding assets such as stocks and commodities on speculation Europe’s fiscal turmoil may hamper economic growth. The loonie is still the second-best performing currency this year after the Mexican peso among the U.S. dollar’s 16 most-traded counterparts. Government Bonds Bank of Canada policy makers will increase the target rate for overnight lending between commercial banks to 1.50 percent by the end of this year, according to the median forecast in a Bloomberg News survey of 11 economists. Government bonds rose. Yields on Canada’s 10-year government bond fell two basis point, or 0.02 percentage point, to 3.37 percent. The price of the 3.5 percent security due June 2020 climbed 17 cents to C$101.10. Canada will auction C$3.5 billion of 5-year bonds on June 9, according to a statement on the Bank of Canada’s website. The 3 percent securities mature in December 2015.

Source