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July 11 (Bloomberg) -- Canada’s dollar declined for a sixth consecutive week, the longest losing streak since December 2007, as commodities slumped and concern increased that the global economic recovery will be delayed.

The dollar fell 0.3 percent the last five days and the 10- year government bonds rose for a third week as investors sold the currencies and stocks of nations such as Canada that depend on raw materials for growth. Natural resources such as oil account for about 56 percent of Canadian gross domestic product.

“The main story with both Canadian bonds and the Canadian dollar is that risk aversion has come back,” said Sal Guatieri, a senior economist in Toronto at BMO Capital Markets, a unit of Canada’s fourth-largest bank. “People are questioning the strength of the green shoots,” or signs that the global economy is recovering from worst downturn since World War II, he said.

Canada’s currency declined to C$1.1638 per U.S. dollar yesterday in Toronto, from C$1.1607 on July 3. One loonie, as the Canadian dollar is known because of the aquatic bird on the nation’s one-dollar coin, buys 85.92 U.S. cents.

The currency last fell six straight weeks in the period ended Dec. 14, 2007, when accelerating inflation in the U.S. prompted investors to reduce expectations for interest-rate cuts in the nation’s largest trading partner.

The yield on the benchmark 10-year note fell seven basis points, or 0.07 percentage point, to 3.28 percent this week. The price of the 3.75 percent security maturing in June 2019 increased 60 cents to C$103.93.

‘Distinct Impact’

The loonie pared early losses yesterday as Statistics Canada said the economy lost a net 7,400 jobs last month after a decrease of 41,800 in May. Total full-time employment in Canada fell by 47,500 positions in June, the statistics agency said, while part-time jobs increased by 40,100. The median forecast of 18 economists surveyed by Bloomberg News was for a net reduction of 35,000.

“We’ve had concern about the global economic outlook, which has a distinct impact for the Canadian dollar,” said David Watt, senior currency strategist in Toronto at RBC Capital Markets, a unit of the country’s biggest bank.

Canadian stocks posted their steepest weekly decline since March 6 as material producers fell with commodity prices. The Standard & Poor’s/TSX Composite Index slid 5.2 percent this week to 9,747.13.

Crude oil, the nation’s biggest export, dropped below $59 a barrel. Crude oil for August delivery was down as much as 2.8 percent to $58.72 a barrel on the New York Mercantile Exchange. It was the fourth consecutive weekly loss. Copper and gold posted losses for a second straight week.

Commodity Currencies

The loonie advanced 5 percent against the greenback so far this year, in May gaining the most in a month since 1950. Bank of Canada Governor Mark Carney said at least twice in June that its “rapid rise” threatened to choke off economic growth.

The Canadian currency lagged behind the dollars of two other commodity-producing countries, Australia and New Zealand. The Aussie gained 11 percent against the greenback this year, and the kiwi advanced 8 percent.

“Canada’s been underperforming its commodity peers since June 11,” RBC’s Watt said. “Oil peaked at that time. Right after that, the Bank of Canada clearly indicated they were uncomfortable with Canadian dollar strength. We saw the Canadian dollar weaken against all currencies at that point.”

Trade Deficit Widens

The nation’s trade deficit widened to a record in May as the loonie appreciated, with exports falling twice as fast as imports. The gap was C$1.42 billion ($1.22 billion), the largest in records dating back to 1971, a Statistics Canada report showed yesterday. The median forecast in a Bloomberg News survey of 17 economists was for a trade deficit of C$500 million.

Canadian Prime Minister Stephen Harper said his government would run budget deficits for as long as it takes to spur the world’s eighth largest economy.

“We will not, in order to meet some timetable, start raising taxes and cutting programs,” Harper said, speaking to reporters in L’Aquila, Italy, after a Group of Eight nations meeting yesterday. “That’s a very dumb policy.”

Canada has been hit by the contraction in the U.S., its biggest market, sapping orders for Canadian lumber, automobiles and metals. One reason for the current global slump is trade imbalances resulting in part from the lack of flexibility of some currencies, Harper said.

G-8 leaders said this week the recovery from the steepest recession since World War II was too fragile for them to consider reversing efforts to pump money into the economy.