CANADA FX DEBT-Canadian dollar retreats from 2-1/2-month high after sharp GDP drop

    * Canadian dollar trades near flat against greenback
    * Loonie touches strongest intraday since March 12 at 1.3714
    * Canada's April GDP falls 11% in flash estimate
    * Canadian bond yields decline across flatter curve

    By Fergal Smith
    TORONTO, May 29 (Reuters) - The Canadian dollar was little
changed against its broadly weaker U.S. counterpart on Friday as
data showed a deep slump in the domestic economy in the first
quarter, with the loonie pulling back from an earlier
two-and-a-half-month high.
    Canada's GDP fell at an annualized rate of 8.2% in the first
quarter as a result of reduced spending and widespread shutdowns
of non-essential businesses in March due to the coronavirus
pandemic, Statistics Canada said. In a flash estimate, Canada's
national statistics agency projected an 11% decline for GDP in
April from March.
    "Our expectation is for a 40% plunge in Q2 as the economy is
devastated by the lockdowns," said Ryan Brecht, a senior
economist at Action Economics. "The easing of those measures so
far in May suggests that the economy bottomed out in April."
    The Canadian dollar          was trading nearly unchanged at
1.3767 to the greenback, or 72.64 U.S. cents. The currency
touched its strongest intraday level since March 12 at 1.3714.
    For the week, the loonie was on track to gain 1.6%.
    The decline for the loonie came as the price of oil, one of
Canada's major exports, was dragged lower by weak U.S. fuel
demand, fears of a second wave of coronavirus cases in South
Korea and a worsening in U.S.-China relations. U.S. crude       
prices were down 2.4% at $32.9 a barrel.
    Global stock markets          fell as investors awaited
Washington's response to China's move to tighten control over
Hong Kong, while the U.S. dollar        lost ground against a
basket of major currencies.              
    Canadian government bond yields were lower across a flatter
curve in sympathy with U.S. Treasuries. The 10-year            
was down 2.9 basis points at 0.531%.

 (Reporting by Fergal Smith
Editing by Paul Simao)