CANADA FX DEBT-C$ strengthens to five-week high as oil extends rally

* Canadian dollar at C$1.2674, or 78.90 U.S. cents
    * Bond prices slightly higher across maturity curve
    * Loonie touches its strongest level since May 3

    TORONTO, June 8 (Reuters) - The Canadian dollar strengthened
to a five-week high against its broadly weaker U.S. counterpart
on Wednesday as oil prices climbed further above $50 a barrel.
    Oil was trading at its highest level in eight months on
supply disruptions in Nigeria and strong Chinese demand data.
U.S. crude prices were up 1.67 percent to $51.2 a
    A weaker U.S. dollar added to gains for the loonie. The
greenback hit a one-month trough against a basket of major
currencies, hurt by waning expectations that the Federal Reserve
will raise interest rates anytime soon. 
    At 9:47 a.m. EDT (1347 GMT), the Canadian dollar 
was trading at C$1.2674 to the greenback, or 78.90 U.S. cents,
stronger than Tuesday's close of C$1.2771, or 78.30 U.S. cents.
    The currency's weakest level of the session was C$1.2760,
while it touched its strongest level since May 3 at $1.2655.
    Canadian Finance Minister Bill Morneau said the country's
expensive housing market is a "very real issue" for Canadians
and the government was "looking at all evidence" as it considers
whether it needs to move again to tighten mortgage regulations.
    The value of Canadian building permits unexpectedly fell by
0.3 percent in April from March, its second consecutive monthly
drop, data from Statistics Canada showed. 
    In separate data, Canadian seasonally adjusted housing
starts slowed to 188,570 in May from a revised 191,388 units in
April, according to the Canada Mortgage and Housing Corporation.
    Canadian employment data for May will be released at the end
of the week. The report will come after a massive wildfire last
month cut production in Alberta's oil sands region.
    The Bank of Canada has said it expects damage from the
wildfire to shave 1.25 percentage points off economic growth in
the second quarter. 
    Canadian government bond prices were slightly higher across
the maturity curve, with the two-year price up 0.5
Canadian cent to yield 0.527 percent and the benchmark 10-year
 rising 8 Canadian cents to yield 1.212 percent.

 (Reporting by Fergal Smith; Editing by Paul Simao)