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Loonie posts slight gain despite oil worries

Canadian dollars (loonies) are pictured in Vancouver, B.C. Thursday, Sept. 22, 2011.

JONATHAN HAYWARD/THE CANADIAN PRESS

The Canadian dollar closed slightly higher Monday as the commodity-sensitive loonie shook off early losses after copper prices added to last week's strong advance.

The loonie was up 0.05 of a cent at 100.08 cents US.

Copper gained two cents at $3.88 (U.S.) a pound on top of rallying about four per cent last week, partly on signs that China could take further steps to loosen lending and encourage economic growth. China is the world's biggest consumer of the metal, which is known as an economic bellwether as it is used in so many different businesses.

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The currency had been negative earlier in the session, going as low as 99.5 cents as traders also mulled over the damage that could result from rising crude prices and a warning from the International Monetary Fund that the global economy remains at risk.

The April crude contract on the New York Mercantile Exchange fell $1.21 to $108.56 a barrel. That is still a long way from the $96 a barrel level where it started the month. Prices have surged primarily because of tensions with Iran over its nuclear program, but also because of signs of stronger growth in the U.S.

But worries have grown that the higher prices could jeopardize the U.S. economic recovery and hurt commodity prices while deepening a recession in Europe.

Comments over the weekend by the head of the IMF kept downward pressure on oil prices.

"We are obviously concerned about (rising prices)," Christine Lagarde said Sunday in Mexico City.

"It has downside effects and risks for developed economies ... it has major consequences for developing countries."

Bullion closed down $1.50 to $1,774.90 an ounce.

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