CANADA FX DEBT-C$ hits 2-week low as oil prices fall, greenback climbs

    * Canadian dollar at C$1.2970, or 77.10 U.S. cents
    * Loonie touches its weakest since May 8 at C$1.2979
    * Oil prices fall 2.6 percent
    * Bond prices higher across a flatter yield curve

    TORONTO, May 25 (Reuters) - The Canadian dollar weakened to
a more than two-week low against its U.S. counterpart on Friday
as oil prices fell and the greenback broadly climbed.
    The price of oil, one of Canada's major exports, slumped
after Saudi Arabia and Russia said they were ready to ease
supply curbs that have pushed crude prices to their highest
since 2014.             
    U.S. crude        prices were down 2.6 percent at $68.88 a
    The U.S. dollar        gained against a basket of major
currencies as rising bond yields in Italy and brewing political
instability in Spain weighed on the euro.             
    At 9:16 a.m. EDT (1316 GMT), the Canadian dollar         
was trading 0.7 percent lower at C$1.2970 to the greenback, or
77.10 U.S. cents. The currency touched its weakest level since
May 8 at C$1.2979.
    On Thursday, the loonie had been pressured by the potential
imposition of U.S. auto tariffs, after the Trump administration
launched a national security investigation into car and truck
    Canada is a major exporter of autos to the United States so
its economy could be hurt by U.S. auto tariffs. 
    Canadian police were looking for two suspects who walked on
Thursday into a crowded restaurant in a Toronto suburb and
detonated a bomb, injuring 15 people. The police said the
incident did not appear to be a hate crime or linked to
international terror.             
    Canadian government bond prices were higher across a flatter
yield curve in sympathy with U.S. Treasuries. The two-year
           rose 6 Canadian cents to yield 1.965 percent and the
10-year             climbed 42 Canadian cents to yield 2.364

 (Reporting by Fergal Smith; Editing by Meredith Mazzilli)