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Canadian dollar falls on gloomy economic outlookJONATHAN HAYWARD/The Canadian Press

The Canadian dollar gave up early gains Wednesday and closed lower as commodity prices extended losses amid global economic worries.

The currency declined 0.23 of a cent to $1.0051 (U.S.). The loonie had earlier been as high as $1.0122 a day after the Bank of Canada maintained its tightening bias for future interest rate hikes and mentioned the possibility of high household debt levels playing a role in raising rates.

Most private sector economists don't believe Governor Mark Carney will take any action on raising rates until late 2013 or early 2014.

The dollar also gave up ground despite a positive outlook from the central bank in its latest monetary policy review, which was released Wednesday morning.

It sees activity picking up globally, giving Canadian exporters a boost and helping the economy bounce back to 2.5 per cent growth in the last three months of the year, followed by 2.6 per cent gains in each of the following three quarters.

Oil and metal prices were weak on top of sharp losses Tuesday as disappointing U.S. earnings reports reflected deteriorating economic conditions.

The December crude contract on the New York Mercantile Exchange fell for a fifth day, down 94 cents to $85.73 a barrel after sliding almost $2 on Tuesday.

And December copper was unchanged at $3.57 a pound. Worries about deteriorating economic conditions had pushed copper down 18 cents in the previous four sessions.

December gold bullion faded $7.80 to $1,701.60 an ounce.

Market sentiment had earlier been helped along by positive news from China, the world's second-biggest economy.

A preliminary version of HSBC's monthly purchasing managers' index rose to a three-month high of 49.1 points. That was still below the 50-point level that indicates an expansion but nevertheless a strong improvement from September's 47.9.

The news wasn't so positive out of Europe where a key survey of business activity, the so-called purchasing managers' index published by financial data company Markit, fell in October to its lowest level in more than three years. A measure of German business confidence also fell.

Meanwhile, the U.S. Federal Reserve took no new action during its two-day policy meeting.

Having announced a third round of economic stimulus in September, it wants time to assess whether those aggressive steps will boost growth and job creation.