CANADA FX DEBT-C$ gains to 3-week high, boosted by higher oil prices

    * Canadian dollar at C$1.2766, or 78.33 U.S. cents
    * Loonie hits strongest since April 20 at C$1.2743
    * Bond prices higher across flatter yield curve

    TORONTO, May 10 (Reuters) - The Canadian dollar strengthened
to a nearly three-week high against its U.S. counterpart on
Thursday as oil prices climbed, while data showing U.S. consumer
prices rebounded less than expected in April weighed on the
    The price of oil, one of Canada's major exports, headed for
its largest weekly increase in a month, as the market prepared
for potential disruption to crude flows from major exporter Iran
in the face of U.S. sanctions.             
    U.S. crude        prices were up 0.1 percent at $71.24 a
    The U.S. dollar        extended losses against a basket of
major currencies after the consumer price data. Some investors
have been expecting an acceleration in inflation to allow the
Federal Reserve to hike interest rates faster.             
    At 9:10 a.m. EDT (1310 GMT), the Canadian dollar         
was trading 0.7 percent higher at C$1.2766 to the greenback, or
78.33 U.S. cents. The currency touched its strongest level since
April 20 at C$1.2743.
    The loonie has rebounded as much as 2 percent since hitting
on Tuesday a nearly seven week low at C$1.2998.
    Canadian new home prices were unchanged in March, as
expected, as higher prices in Ottawa were offset by a weaker
Toronto market, data from Statistics Canada showed.
    Canadian government bond prices were higher across a flatter
yield curve in sympathy with U.S. Treasuries. The two-year
           rose 1 Canadian cent to yield 1.953 percent and the
10-year             gained 13 Canadian cents to yield 2.379
    The 2-year yield touched its highest intraday since June
2011 at 1.964 percent.
    Canada's jobs report for April is due on Friday.

 (Reporting by Fergal Smith; Editing by Bernadette Baum)