CANADA FX DEBT-C$ weakens as oil slides, manufacturing data disappoints

* Canadian dollar at C$1.2873, or 77.68 U.S. cents
    * Bond prices higher across the maturity curve

    TORONTO, April 15 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Friday as oil prices fell and
after a deeper-than-expected drop in Canadian manufacturing
    Oil prices slid despite reassuring Chinese data
, as analysts said a weekend meeting of major oil
exporters would do little to help clear global oversupply. 
    U.S. crude prices were down 2.39 percent to $40.51 a
    Factory sales dropped more than expected in February from
January, falling 3.3 percent following three straight months of
gains, data from Statistics Canada showed. 
    At 9:03 a.m. EDT (1303 GMT), the Canadian dollar 
was trading at C$1.2873 to the greenback, or 77.68 U.S. cents,
weaker than Thursday's close of C$1.2849, or 77.83 U.S. cents.
    The currency's strongest level of the session was C$1.2798,
while its weakest was C$1.2896.
    The loonie hit a nearly nine-month high at C$1.2744 on
Wednesday. However, the central bank warned the same day that
the country's improving economy faced downside risks, including
a stronger currency that could drag on non-commodity exports,
although it held interest rates steady and raised growth
    Still, the implied probability of a Bank of Canada rate cut
this year has been reduced to near zero from more than 50
percent at the start of March. 
    Canadian government bond prices were higher across a flatter
maturity curve, with the two-year price up 1.5
Canadian cents to yield 0.589 percent and the benchmark 10-year
 rising 30 Canadian cents to yield 1.262 percent.
    The Canada-U.S. 10-year spread was 2.4 basis points more
negative at -50.9 basis points as Canadian government bonds
outperformed. The spread touched -48.5 basis points on Monday
and on Thursday, its narrowest gap since May 2015.

 (Reporting by Fergal Smith; Editing by Meredith Mazzilli)