CANADA FX DEBT-Canadian dollar hits 6-day low as month-end buying lifts greenback

 (Adds strategist quotes and details throughout, updates prices)
    * Canadian dollar weakens 0.5% against the greenback
    * Price of U.S. oil settles 0.6% lower
    * Producer prices in Canada fall 0.3% in August
    * Canadian 10-year yield rises 2.3 basis points

    By Fergal Smith
    TORONTO, Sept 29 (Reuters) - The Canadian dollar weakened on
Wednesday to its lowest level in nearly a week against its U.S.
counterpart as oil prices fell and the greenback posted
broad-based gains.
    The loonie        was trading 0.5% lower at 1.2749 to the
greenback, or 78.44 U.S. cents, after touching its weakest level
since last Thursday at 1.2774.    
    "Month-end flows are likely playing a role in the broad
dollar strength today," said Erik Nelson, a currency strategist
at Wells Fargo in New York. "Risk sentiment remains shaky, which
has also weighed on the Canadian dollar."
    The U.S. dollar        surged to a 10-1/2-month peak against
rival currencies, including the euro       , even though a
dispute in Washington over the U.S. debt ceiling threatened to
plunge the government into a shutdown.             
    Losses for the loonie "accelerated" as the euro fell to its
lowest level of the year, Nelson said.
    The price of oil, one of Canada's major exports, was
pressured by an unexpected rise in U.S. crude inventories and
concerns about a slowing Chinese economy. U.S. crude oil futures
       settled 0.6% lower at $74.83 a barrel.                  
    Producer prices in Canada fell by 0.3% in August from July
on lower prices for softwood lumber, Statistics Canada said.
Still, they were up 14.3% from August last year.                
    Canadian government bond yields rose even as traders paused
their selling of U.S. Treasuries.
    The Canadian 10-year yield             was up 2.3 basis
points at 1.523%, while the gap between it and its U.S.
equivalent narrowed by 1.8 basis points to a spread of 1.8 basis
points in favor of the U.S. bond, its smallest since April last
    Canada's bond market will be closed on Thursday for the
National Day for Truth and Reconciliation. GDP data for July is
due on Friday, which could provide clues on the Bank of Canada
policy outlook.

 (Reporting by Fergal Smith; Editing by Jonathan Oatis and Peter