CANADA FX DEBT-C$ dips but holds on to most of NAFTA deal gains

    * Canadian dollar dips 0.1 percent against the greenback
    * Currency trades in a narrow range between 1.2808 and
    * Canadian bond prices decline across a steeper yield curve

    TORONTO, Oct 3 (Reuters) - The Canadian dollar edged lower
against its U.S. counterpart on Wednesday as comments by a top
U.S. policymaker boosted the greenback, but the loonie clung to
most of the gains that followed a deal over the weekend to
revamp the NAFTA trade pact.
     The U.S. dollar        strengthened against other major
currencies after Federal Reserve policymaker Charles Evans said
inflation expectations have not gone up as much as he would have
liked and he was comfortable with a December interest rate hike.
    The Bank of Canada is also expected to tighten further after
a deal to salvage the trilateral North American Free Trade
Agreement reduced uncertainty for Canada's trade-dependent
    Still, China's hopes of negotiating a free trade pact with
Canada or Mexico were dealt a sharp setback by a provision deep
in the new U.S.-Mexico-Canada trade agreement that aims to
forbid such deals with "non-market" countries, trade experts
said on Tuesday.             
    At 9:12 a.m. (1312 GMT), the Canadian dollar          was
trading 0.1 percent lower at 1.2837 to the greenback, or 77.90
U.S. cents.
    The currency, which on Monday touched its strongest level in
more than four months at 1.2783, traded in a narrow range
between 1.2808 and 1.2844.
    The modest decline for the loonie came as European shares
rose and Italian bonds rallied. Some of the worries that have
rippled across markets this week were soothed by signs Rome was
amenable to cutting budget deficits and debt in coming years.
    The price of oil, one of Canada's major exports, held near a
four-year high even as top exporter Saudi Arabia said it
increased output to near a record high and after Reuters
reported that Russia and Saudi Arabia had struck a private deal
in September to pump more.             
    U.S. crude        prices were nearly unchanged at $75.21 a
    Canadian government bond prices were lower across a steeper
yield curve in sympathy with U.S. Treasuries. The two-year
           fell 2.5 Canadian cents to yield 2.284 percent and
the 10-year             declined 18 Canadian cents to yield
2.486 percent.
    On Monday, the yield on the 10-year reached its highest in
more than four months at 2.519 percent. 
    Canada's jobs data for September and August trade data are
due on Friday.

 (Reporting by Fergal Smith; editing by Jonathan Oatis)