* Low of C$1.0750 to the US$, or 93.02 U.S. cents
* Oil prices tumble to $77
* Bonds rally on risk aversion
TORONTO, May 6 (Reuters) - The Canadian dollar extended its
plunge against it U.S. counterpart on Thursday afternoon on
worries the Greek debt crisis may spread to other euro zone
countries and threaten economic recovery.
The currency <CAD=D4> hit a low of C$1.0750 to the U.S.
dollar, or 93.02 U.S. cents -- its lowest level since Feb. 9,
and more than 4 U.S. cents below Wednesday's close.
"What I think we have here is momentum selling. People hit
their pain thresholds and everybody has hit the sell button at
the same time, bought U.S. treasuries, bought the U.S. dollar,"
said Sacha Tihanyi, a currency strategist at Scotia Capital.
"It's a very violent move."
The currency's fall was the steepest intraday drop since
At 3:25 p.m. (1925 GMT), the currency had rebounded
somewhat and was at C$1.0580 to the U.S. dollar, or 94.52 U.S.
cents, down from Wednesday's finish at C$1.0297 to the U.S.
dollar, or 97.12 U.S. cents.
"It seems like the worst of the panic has abated and there
has been quite an aggressive reversal, certainly in the equity
markets," said Eric Lascelles, chief Canada macro strategist at
The commodity-linked Canadian currency was also battered by
the price of oil, a key export, which was down almost $3 around
$77 a barrel on worries about lower demand. [O/R]
Toronto stocks fell more than 3 percent alongside U.S.
equities, before paring losses. The Nasdaq at one point was
down more than 9 percent while the S&P 500 and Dow briefly
slipped into negative territory for the year. [.N] [.TO]
"By contrast, bonds have rallied with ferocity and the U.S.
dollar is playing its traditional safe-haven role. It is up
quite substantially right now," Lascelles said.
INVESTORS FLOCK TO BONDS
Canadian government bond prices rallied across the curve on
the "intensification of the whole contagion theme," said George
Davis," chief technical strategist at RBC Capital Markets.
"Now it's certainly not just a Greek problem. People are
starting to worry that we could see a more significant spread
of sovereign risk to other countries such as Portugal and
Spain," he said.
"People in general are just parking their money in fixed
income instruments right now, playing the safety angle more
than anything else until this uncertainty starts to abate."
The two-year government bond <CA2YT=RR> climbed 21 Canadian
cents to C$99.47 to yield 1.763 percent, while the 10-year bond
<CA10YT=RR> shot up 85 Canadian cents to C$100.50 to yield
(Writing by Claire Sibonney, reporting by Toronto newsroom;
editing by Rob Wilson