CANADA FX DEBT-C$ strengthens to 4-week high as oil rallies

(Adds analyst quotes, updates prices)
    * Canadian dollar settles at C$1.2962, or 77.15 U.S. cents
    * C$ touches its strongest since July 15 at C$1.2925
    * Bond prices higher across maturity curve

    By Fergal Smith
    TORONTO, Aug 12 (Reuters) - The Canadian dollar strengthened
to a four-week high against its U.S. counterpart on Friday, as
oil rallied and weaker-than-expected U.S. data weighed on the
    The Canadian currency ended the week 1.5 percent higher. The
currency had been hit on Aug. 5 by weak domestic employment and
trade data that contrasted with a robust U.S. jobs report.
    "You have had oil bouncing off its lows and you've had a
weak (U.S.) dollar environment over the course of this week. So
I think a combination of those two factors is driving demand for
commodity, higher-yielding currencies," said Ian Gordon, FX
strategist at Bank of America Merrill Lynch.
    Oil prices rose on possible action by producers to help
stabilize the market. U.S. crude oil futures settled up
$1 at $44.49 a barrel.       
    The U.S. dollar fell against a basket of major
currencies after U.S. data showed that retail sales were
unexpectedly flat in July.    
    The Canadian dollar ended at C$1.2962 to the
greenback, or 77.15 U.S. cents, stronger than Thursday's close
of C$1.2980, or 77.04 U.S. cents.
    The currency's weakest level of the session was C$1.2993,
while it touched its strongest since July 15 at C$1.2925.
    "I am still skeptical that it is going to continue as the
Canadian macro data continues to disappoint," said Gordon.
    "You have seen basically non-energy exports completely
stalling out," he added.
    Weak U.S. business investment has hampered a long-awaited
pick-up in growth of Canada's non-energy exports, economists
say, while a weaker Canadian dollar has not helped exports as
much as expected. 
    Canadian government bond prices were higher across the
maturity curve in sympathy with U.S. Treasuries as expectations
dipped for a Federal Reserve rate hike this year.
    The two-year bond edged up 2.5 Canadian cents to
yield 0.526 percent and the benchmark 10-year rose
19 Canadian cents to yield 1.011 percent.
    Canada's Teranet-National Bank Composite House Price Index
showed national home prices rose 2.0 percent last month from
June. Prices were up 10.9 percent from a year earlier.

 (Editing by Jeffrey Benkoe and Jeffrey Hodgson)