CANADA FX DEBT-C$ sets 7-week low; bounce in oil restrains losses

* Canadian dollar at C$1.3203, or 75.74 U.S. cents
    * Loonie touches its weakest since July 27 at C$1.3236
    * Bond prices lower across a steeper yield curve

    TORONTO, Sept 15 (Reuters) - The Canadian dollar weakened to
set a seven-week low against its U.S. counterpart on Thursday,
although losses were restrained as oil rebounded and U.S.
economic data came in weaker than expected.
    Losses for the loonie came after a recent rise in bond
yields, which has triggered selling of emerging-market
currencies and commodity-linked currencies such as the Canadian
    The U.S. dollar seesawed against a basket of major
currencies after retail sales and industrial production data
    Oil prices edged up after two consecutive days of losses,
with gains capped by returning supplies from Nigeria and Libya.
U.S. crude was up 0.67 percent at $43.87 a barrel.
    At 9:38 a.m. EDT (1338 GMT), the Canadian dollar 
was trading at C$1.3203 to the greenback, or 75.74 U.S. cents,
slightly weaker than Wednesday's close of C$1.3197, or 75.77
U.S. cents.
    The currency's strongest level of the session was C$1.3157,
while it touched its weakest since July 27 at C$1.3236.
    Canadian household debt as a share of income hit a record
high in the second quarter, Statistics Canada data showed in a
report likely to reinforce concerns of overborrowing by
    Sales of existing Canadian homes fell 3.1 percent in August
from July, the fourth straight monthly decline and the largest
drop in nearly two years, a report from the Canadian Real Estate
Association showed. Still, actual sales, not seasonally
adjusted, were up 10.2 percent from August 2015. 
    Canadian government bond prices were lower across the yield
curve in sympathy with U.S. Treasuries. The two-year 
fell 1 Canadian cent to yield 0.592 percent, and the benchmark
10-year declined 34 Canadian cents to yield 1.224
    The curve steepened as the spread between the two-year and
10-year yields widened by 3.1 basis points to 63.2 basis points,
indicating underperformance for longer-dated bonds.

 (Reporting by Fergal Smith; Editing by Lisa Von Ahn)