* Canadian dollar at C$1.2604, or 79.34 U.S. cents
* Canadian wholesale trade falls 0.5 percent in December
* Bond prices lower across the yield curve
* Canada-U.S. 2-year spread posts its widest since June 26
TORONTO, Feb 20 (Reuters) - The Canadian dollar weakened to a nearly one-week low against its U.S. counterpart on Tuesday as the greenback broadly rose and following domestic data that showed an unexpected drop in December wholesale trade. Canadian wholesale trade fell 0.5 percent due to lower sales in the personal and household goods sector, Statistics Canada said. Analysts surveyed by Reuters had forecast a 0.4 percent increase. The data "bodes poorly" for growth in the economy in December, Ryan Brecht, a senior economist at Action Economics, said in a research note. On Friday, data showed that Canadian manufacturing shipments also declined in December.
The U.S. dollar climbed on Tuesday against a basket
of major currencies, continuing a rebound from a sharp decline in recent weeks that took it to three-year lows. At 9:19 a.m. EST (1419 GMT), the Canadian dollar was trading 0.4 percent lower at C$1.2604 to the greenback, or 79.34 U.S. cents. The currency's strongest level of the session was C$1.2558, while it touched its weakest since Feb. 14 at C$1.2629. Global stocks fell as Wall Street returned from a long holiday weekend, pressured by a rise in bond yields.
Lower equity markets tend to weigh on commodity-linked currencies, such as the Canadian dollar. Reduced supply from Canada to the United States caused by pipeline reductions helped boost U.S. crude oil prices. U.S.
crude prices were up 0.2 percent at $61.81 a barrel.
Canadian government bond prices were lower across the yield curve in sympathy with U.S. Treasuries. The two-year dipped 2 Canadian cents to yield 1.834 percent and the 10-year declined 14 Canadian cents to yield 2.337 percent. Canadian and U.S. bond markets were closed on Monday for holidays. The gap between Canada's 2-year yield and its U.S. equivalent widened by 3.1 basis points to a spread of -39.7 basis points, its widest since June 26. Canada's retail sales report for December is due on Thursday and the country's January inflation report is due on Friday.
(Reporting by Fergal Smith; Editing by Bernadette Baum)