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Canadian dollar coins, also known as "loonies, " are shown with U.S dollars. (Ryan Remiorz/The Canadian Press/Ryan Remiorz/The Canadian Press)
Canadian dollar coins, also known as "loonies, " are shown with U.S dollars. (Ryan Remiorz/The Canadian Press/Ryan Remiorz/The Canadian Press)

Dollar drops in light of bad economic growth data Add to ...

The Canadian dollar closed lower Friday as reports showed slowing economic conditions in Canada and the United States.

The loonie was off early lows, but finished down 0.43 of a cent at $1.0466 (U.S.) after going as low as $1.043.

Statistics Canada reported that real gross domestic product decreased by 0.3 per cent in May, much worse than the 0.2 per cent gain that had been expected. Growth was flat in April.

The agency said the mining and oil and gas extraction sector was the main source of the decline in May while manufacturing and construction also contributed to the poor showing.

Other data released Friday showed that the American economy grew by an anemic 1.3 per cent in the second quarter versus a rise of 1.8 per cent that economists had expected. First-quarter growth was revised to 0.4 per cent from 1.9 per cent.

Meanwhile, investors looked for the next move in resolving the U.S. debt crisis ahead of Tuesday's deadline.

House Republicans tried for a third straight day to pass a bill that would raise the borrowing limit while cutting federal spending by nearly $1 trillion. President Barack Obama said again Friday that he will not sign the Republican bill. Democrats say any bill must raise the debt ceiling enough to postpone the need for any additional increases until at least 2013.

Worries of worsening economic conditions helped put pressure on oil prices as the September contract on the New York Mercantile Exchange closed down $1.74 at $95.70 a barrel.

Metal prices gained ground with the September copper contract in New York ahead one cent at $4.48 a pound.

Nervous investors continued to push gold bullion further into record territory, with the December contract on the Nymex ahead $15 at US$1,631.20 an ounce.

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