CANADA FX DEBT-C$ hits 2-week low as commodity-linked currencies slip

    * Canadian dollar at C$1.2593, or 79.41 U.S. cents
    * Loonie touches its weakest since July 20 at C$1.2618
    * Bond prices higher across the yield curve

    TORONTO, Aug 3 (Reuters) - The Canadian dollar weakened to a
two-week low against its U.S. counterpart on Thursday, as
commodity-linked currencies extended this week's losses after
solid gains over recent months.
    The U.S. dollar        climbed against a basket of major
currencies, with most of its gains coming against the
commodity-linked currencies, such as the Australian dollar
         and its Canadian counterpart as investors took profits.
    Losses for the loonie came as data showed Toronto home sales
plummeted in July from a year earlier and prices were down
nearly 19 percent from April as government moves to cool a long
housing boom in Canada's largest city spooked buyers.
    A slowdown in the country's housing market could weigh on
Canada's economy and reduce the number of additional interest
rate increases from the Bank of Canada that the market expects,
after the central bank hiked last month for the first time in
nearly seven years.
    Economist expect the Bank of Canada to raise rates a further
three times by the end of 2018.             
    At 9:39 a.m. ET (1339 GMT), the Canadian dollar          was
trading at C$1.2593 to the greenback, or 79.41 U.S. cents, down
0.2 percent.
    The currency's strongest level of the session was C$1.2566,
while it touched its weakest since July 20 at C$1.2618.
    The loonie has rallied 9.5 percent since early May. It
touched last week its strongest in more than two years at
    But the recent upsurge in Canada's dollar will fade in
coming months on prospects the Bank of Canada sounds less
hawkish on interest rate hikes and fails to keep pace with the
U.S. Federal Reserve, a Reuters poll found.                     
    Prices of oil, one of Canada's major exports, rose as signs
of a tightening U.S. market offset ample supplies from
Organization of the Petroleum Exporting Countries producers.
    U.S. crude        prices were up 0.58 percent at $49.88 a
    Canadian government bond prices were higher across the yield
 curve in sympathy with U.S. Treasuries. The two-year           
price rose 1.5 Canadian cents to yield 1.255 percent and the
10-year             climbed 10 Canadian cents to yield 1.928
    Canadian and U.S. jobs data for July and domestic trade data
for June are due on Friday.         

 (Reporting by Fergal Smith; Editing by Nick Zieminski)