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. “It was a really strong Canadian number, which has been the theme here, but it’s been completely overshadowed by European problems,” said Blake Jespersen, director of foreign exchange in Toronto at Bank of Montreal. “Despite the continued good news out of Canada, we’re being completely swept up by problems everywhere.” The Canadian dollar fell 0.9 percent to $1.0495 per U.S. dollar at 9:09 a.m. in Toronto, from C$1.0402 yesterday. One Canadian dollar buys 95.28 U.S. cents. The Stoxx Europe 600 Index slid 1.5 percent, 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. “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.” Bank of Canada 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. Crude oil, Canada’s biggest export, dropped 2 percent, erasing earlier gains. The loonie tends to follow movements in stocks and commodities. Canada’s unemployment rate was unchanged at 8.1 percent, Statistics Canada said today in Ottawa. Canada’s jobs gain in May follows a record 108,700 jump in April. Employers in the U.S. hired fewer workers in May than forecast and Americans dropped out of the labor force, showing a lack of confidence in the recovery that may lead to slower economic growth. Jobs Report “It wasn’t as high as everyone expected, so the kneejerk reaction was the risk-off trade which actually was to buy U.S. dollars,” Jespersen said. “We like the Canadian dollar against a lot of the other currencies but unfortunately against the U.S. dollar, the story’s the same: risk aversion is going to take this higher.” Canada’s currency had gained 0.6 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 third-best performing currency this year after the Mexican peso and the yen among the U.S. dollar’s 16 most-traded counterparts. Government Bonds Government bonds rose. Yields on Canada’s 10-year government bond fell six basis point, or 0.06 percentage point, to 3.33 percent. The price of the 3.5 percent security due June 2020 climbed 47 cents to C$101.40. 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. --Editors: James Holloway, To contact the reporter on this story: Chris Fournier in Montreal at cfournier3@bloomberg.net To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

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