CANADA FX DEBT-C$ near 2-month highs, bolstered by oil price rally

* Canadian dollar at C$1.2981 or 77.04 U.S. cents
    * Bond prices mostly lower across the maturity curve

    TORONTO, Oct 7 (Reuters) - The Canadian dollar firmed for
the sixth straight session against the U.S. dollar on Wednesday,
touching levels not seen in nearly two months as crude oil
prices pushed higher on evidence supplies were falling and
demand was rising.
    Oil, a major Canadian export, has been a significant drag on
the loonie for more than a year now, with the currency plunging
to multi-year lows alongside crude prices that have more than
halved since June 2014.
    Oil prices have rallied over the last four sessions,
however, with Brent closing above $50 a barrel for the first
time in a month on Tuesday and U.S. light crude approaching $50.
    * At 9:59 a.m. EDT (1359 GMT), the Canadian dollar 
was trading at C$1.2981 to the greenback, or 77.04 U.S. cents,
stronger than the Bank of Canada's official close of C$1.3027,
or 76.76 U.S. cents on Tuesday.
    * The currency, which had stumbled to an 11-year low of
C$1.3457 just last week, was trading between C$1.2981 and
C$1.3053 so far in the session.
    * FX strategists expect the USD/CAD correction to continue,
with RBC Capital Markets noting that C$1.2953 and C$1.2872 are
the next key levels to watch for.
    * A Reuters poll released on Wednesday indicates the loonie
will likely weaken over the coming months, however, due to
volatile oil prices, the upcoming Canadian federal election, and
expectations the Federal Reserve will eventually hike interest
    * The value of Canadian building permits issued in August
unexpectedly fell by 3.7 percent from July on a decline in
construction intentions in several provinces, Statistics Canada
data indicated. A Reuters poll showed analysts had expected the
value of permits to increase by 0.8 percent. 
    * Canadian employment data for September is due on Friday at
8:30 a.m. EDT.
    * U.S. crude prices were up 1.85 percent at $49.43,
while Brent crude added 2.08 percent to $53. 
    * Canadian government bond prices were mostly lower across
the maturity curve, with the two-year price down 5.5
Canadian cents to yield 0.536 percent and the benchmark 10-year
 falling 45 Canadian cents to yield 1.468 percent.
    * The Canada-U.S. two-year bond spread was -9.7 basis
points, while the 10-year spread was -61.1 basis points.

 (Reporting by Solarina Ho; Editing by Andrea Ricci)