* Canadian dollar weakens 0.5% against greenback
* Touches weakest level since last Thursday
* Bank of Canada holds benchmark rate at 5%
* Canadian bond yields rise across the curve
TORONTO, Jan 24 (Reuters) - The Canadian dollar weakened to a near one-week low against its U.S. counterpart on Wednesday as the Bank of Canada's lack of urgency to cut interest rates raised concern among some investors of a deeper slowdown in the domestic economy.
The loonie was trading 0.5% lower at 1.3524 to the greenback, or 73.94 U.S. cents, its weakest level since last Thursday.
It was the only Group of Ten (G10) currency to lose ground against the U.S. dollar as the greenback gave back some recent gains against a basket of major currencies.
"The U.S. economy is growing above its trend and Canada is stagnating. There's not really a compelling story for people to go out and buy Canada," said Marc Chandler, chief market strategist at Bannockburn Global Forex LLC.
"The market thinks that the longer they (the Bank of Canada) have to wait to cut, the more they have to cut."
The Canadian central bank expects economic data to show no growth in Canada's economy in the fourth quarter after it contracted in the previous quarter.
Still, the bank held its key overnight rate at a 22-year high of 5% on Wednesday, concerned about the persistence of underlying inflation, and said it was too soon to discuss cutting rates.
Money markets have not fully priced in a first rate cut until June.
The BoC's unwinding of a pandemic-era stimulus policy could end sooner than expected after a shortage of cash in the financial system forced the central bank to use a key liquidity operation for the first time in four years.
The price of oil, one of Canada's major exports, settled nearly 1% higher at $75.09 a barrel, helped by a bigger-than-expected U.S. crude storage withdrawal.
Canadian government bond yields moved higher across the curve, with the 10-year up 2.4 basis points at 3.497%. (Reporting by Fergal Smith; Editing by Paul Simao)
