CANADA FX DEBT-C$ dips with oil as investors weigh trade talks

    * Canadian dollar at C$1.2917, or 77.42 U.S. cents
    * Oil prices fall 0.6 percent
    * Bond prices lower across the yield curve

    TORONTO, March 26 (Reuters) - The Canadian dollar edged
lower against its U.S. counterpart on Monday as oil prices
dipped, with the loonie unable to build on last week's gains
even as fear of a global trade war lessened.
    Global stocks came off six-week lows on optimism that the
United States and China are set to begin trade talks. Canada's
commodity-linked economy could be hurt if global trade slowed.
    The price of oil, one of Canada's major exports, pulled back
from an earlier two-month high. U.S. crude        prices, which
had been supported by escalating Saudi-Iran tensions, were down
0.6 percent at $65.5 a barrel.             
    At 9:26 a.m. EST (1326 GMT), the Canadian dollar         
was trading 0.2 percent lower at C$1.2917 to the greenback, or
77.42 U.S. cents.
    The currency traded in a range of C$1.2841 to C$1.2922.    
    On Friday, the currency touched its strongest since March 12
at C$1.2824 after hotter-than-expected domestic inflation data
raised prospects of a further Bank of Canada interest rate hike
as soon as next month.
    The loonie has also benefited recently from optimism about a
deal to revamp the North American Free Trade Agreement. It rose
1.6 percent last week.
    Speculators have raised bullish bets on the Canadian dollar
for the first time in six weeks, data from the U.S. Commodity
Futures Trading Commission and Reuters calculations showed on
Friday. As of March 20, net long positions had increased to
24,560 contracts from 19,420 a week earlier.
    Canadian government bond prices were lower across the yield
curve, with the two-year            down 3 Canadian cents to
yield 1.869 percent and the 10-year             falling 11
Canadian cents to yield 2.207 percent.    
    Canada's gross domestic product data for January is due on

 (Reporting by Fergal Smith
Editing by Susan Thomas)