CANADA FX DEBT-C$ near 5-month high as oil prices climb

    * Canadian dollar at C$1.3032, or 76.73 U.S. cents
    * Loonie touches its strongest since Feb. 3 at C$1.3006
    * Bond prices lower across a steeper yield curve
    * 10-year yield touches 3-month high at 1.714 percent

    TORONTO, June 29 (Reuters) - The Canadian dollar edged up to
a nearly 5-month high against its U.S. counterpart on Thursday
as oil prices rose, while investors braced for an interest rate
hike from the Bank of Canada as soon as next month.
    Gains for the loonie came after it scored on Wednesday its
biggest advance in three months, boosted by hawkish comments
from Bank of Canada Governor Stephen Poloz.             
    Chances of a rate hike next month have increased to 44
percent from just 20 percent after subdued inflation data on
Friday, data from the overnight index swaps market shows.
    By the end of the year, the market has fully discounted a
rate hike and is about one-third priced for a second tightening.
    Prices of oil, one of Canada's major exports, rose to a
two-week high, after a decline in weekly U.S. production eased
concerns about deepening oversupply.             
    U.S. crude        prices were up 0.78 percent at $45.09 a
    At 9:23 a.m. ET (1323 GMT), the Canadian dollar          was
trading at C$1.3032 to the greenback, or 76.73 U.S. cents, up
0.1 percent.
    The currency's weakest level of the session was C$1.3044,
while it touched its strongest since Feb. 3 at C$1.3006.
    The total number of non-farm payroll employees rose by 4,800
in April from March, data from Statistics Canada showed.
    Canada's gross domestic product data for April and the Bank
of Canada's business outlook report are due on Friday.         
    Canadian government bond prices lower across a steeper yield
curve in sympathy with U.S. Treasuries and German Bunds,
pressured by the view that global central banks are becoming
less accommodative.             
    The two-year            fell 6.5 Canadian cents to yield
1.083 percent and the 10-year             declined 67 Canadian
cents to yield 1.700 percent.
    The 10-year yield touched its highest intraday since March
21 at 1.714 percent, while the gap between it and its U.S.
equivalent narrowed by 1.5 basis points to a spread of -58.4
basis points, its narrowest since Oct. 20, as Canadian
government bonds underperformed.

 (Reporting by Fergal Smith; Editing by Nick Zieminski)