CANADA FX DEBT-C$ stronger as oil price stable after surge

(Adds strategist comment, updates prices to close)
    * Canadian dollar ends at C$1.3167, or 75.95 U.S. cents
    * Bond prices lower across the maturity curve

    By Alastair Sharp
    TORONTO, Oct 29 (Reuters) - The Canadian dollar strengthened
against its U.S. counterpart on Thursday, as oil prices
supported the commodity-linked currency and the greenback pulled
back a day after a hawkish U.S. Federal Reserve statement.
    "A supportive oil story has helped the Canadian dollar come
back a fair bit," said Don Mikolich, executive director for
foreign exchange sales at CIBC World Markets, adding that
narrowing interest rate spreads had also helped.
    U.S. crude prices settled barely higher on Thursday, but
that was taken positively after its biggest rally in two months
the day before. 
    The loonie, as Canada's currency is colloquially known,
settled at C$1.3167, or 75.95 U.S. cents, stronger than
Wednesday's close of C$1.3192, or 75.80 U.S. cents. 
    But Mikolich said the Canadian dollar would likely face
further headwinds in coming months, given broader economic
worries and little impetus for oil to move significantly higher.
    "It's hard to envisage things getting overly Canada-positive
at this stage," he said.
    U.S. gross domestic product increased at a 1.5 percent
annual rate after expanding at a 3.9 percent clip in the second
    Canadian producer prices slipped 0.3 percent, more than the
0.1 percent expected, on lower prices for energy and petroleum
    Canadian government bond prices were lower across the
maturity curve, with the two-year price down 5.5
Canadian cents to yield 0.573 percent and the benchmark 10-year
 falling 60 Canadian cents to yield 1.547 percent.
    The Canada-U.S. two-year bond spread was -15.5 basis points,
while the 10-year spread was -62.2 basis points.

 (Reporting by Alastair Sharp; Editing by Bernadette Baum)