By Chris Fournier Jan. 26 (Bloomberg) -- Canada’s currency fell to the lowest in five weeks after people familiar with the situation said Chinese commercial banks have begun tightening credit, and Standard & Poor’s cut Japan’s credit-rating outlook. The Canadian dollar and all of its major counterparts declined against the yen and U.S. dollar as investors pared bets on higher-yielding assets on concern a global economic recovery may not be sustained when emergency stimulus is withdrawn. Crude oil, Canada’s largest export, dropped. A push by the People’s Bank of China to curb credit and the S&P downgrade of Japan’s outlook are “the two catalysts creating risk aversion in the market,” said Jack Spitz, managing director of foreign exchange at National Bank of Canada in Toronto. “The Canadian dollar is underperforming because of the negative implications for global growth. It’s more about the global issues.” The Canadian currency depreciated 0.6 percent to C$1.0642 per U.S. dollar at 8:31 a.m. in Toronto, from C$1.0577 yesterday. It touched C$1.0658, the weakest level since Dec. 21. One Canadian dollar buys 93.97 U.S. cents. Canada’s dollar has weakened 0.9 percent this year after rising 16 percent in 2009 on a rebound in prices for raw materials such as crude and copper. Commodities account for about half of the nation’s export revenue. Crude oil for March delivery fell 1.2 percent to $74.37 a barrel in New York. Global stocks declined, with the MSCI World Index, a measure of equities in 23 developed nations, sliding 0.5 percent. Futures on the Standard & Poor’s 500 Index dropped 0.4 percent. To contact the reporter on this story: Chris Fournier in Montreal at cfournier3@bloomberg.net

Source