CANADA FX DEBT-C$ rebounds from 4-week low as greenback slips

    * Canadian dollar at C$1.2680, or 78.86 U.S. cents
    * Loonie touches its weakest since July 13 at C$1.2753
    * Bond prices mixed across a steeper yield curve

    TORONTO, Aug 11 (Reuters) - The Canadian dollar strengthened
against its U.S. counterpart on Friday, recovering from an
earlier four-week low as softer-than-expected U.S. inflation
data pressured the greenback.
     The U.S. dollar        fell against a basket of major
currencies after data showed consumer prices rose less than
expected in July, pointing to benign inflation that could make
the Federal Reserve cautious about raising interest rates again
this year.             
    At 9:00 a.m. ET (1300 GMT), the Canadian dollar          was
trading at C$1.2680 to the greenback, or 78.86 U.S. cents, up
0.5 percent.
    The currency's strongest level of the session was C$1.2653.
But it touched its weakest since July 13 at C$1.2753 and was on
track to fall 0.2 percent for the week.    
    Prices of oil, one of Canada's major exports, fell to their
lowest in more than a week after the International Energy Agency
said market rebalancing was taking time despite strong demand
growth due to weak Organization of the Petroleum Exporting
Countries compliance with output cuts.             
    U.S. crude        prices were down 0.31 percent at $48.44 a
    U.S. President Donald Trump issued a new threat to North
Korea, saying American weapons were "locked and loaded" as
Pyongyang accused him of driving the Korean Peninsula to the
brink of nuclear war.
    As a major commodity producer, Canada could be hurt if
geopolitics hamper global trade. 
    Canadian government bond prices were mixed across a steeper
yield curve, with the two-year            flat to yield 1.221
percent and the 10-year             falling 13 Canadian cents to
yield 1.867 percent.
    Next week, Canadian Foreign Minister Chrystia Freeland will
testify to a Parliamentary committee on Monday about the
government's negotiating position heading into talks on
recrafting the North American Free Trade Agreement.

 (Reporting by Fergal Smith; Editing by Meredith Mazzilli)