(Adds economist quote and details on activity; updates prices) * Canadian dollar advances 0.5% against the greenback * Canadian home sales jump 26% in July from June * Price of U.S. oil increases 2.1% * Canadian bond yields ease across a flatter curve By Fergal Smith TORONTO, Aug 17 (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Monday as oil prices climbed and domestic data showed a surge in home sales to a record high, with the loonie nearing its strongest level in nearly seven months. Canadian home sales rose 26% in July from June, posting the highest monthly level ever recorded, the Canadian Real Estate Association (CREA) said, as pent-up demand following lockdowns continued to fuel the market. "Any macro bet with a short Canadian housing thesis has gotten scorched yet again," said Derek Holt, vice President of capital markets economics at Scotiabank. The price of oil, one of Canada's major exports, rose as China's plans to increase U.S. crude imports countered rising tensions between the two major consumers. U.S. crude prices settled up 2.1% at $42.89 a barrel, while the Canadian dollar was trading 0.5% higher at 1.3198 to the greenback, or 75.77 U.S. cents. The currency, which last Thursday touched its strongest intraday level since Jan. 30 at 1.3188, traded in a range of 1.3192 to 1.3262. The U.S. dollar fell against a basket of major currencies ahead of the release of minutes this week of the Federal Reserve's last policy meeting. Speculation is rife the U.S. central bank will adopt an average inflation target. Speculators have raised bearish bets on the loonie to the highest in seven weeks, data from the U.S. Commodity Futures Trading Commission showed on Friday. Canadian Prime Minister Justin Trudeau and Finance Minister Bill Morneau were scheduled to meet on Monday in a bid to sort out their differences, said a Reuters source aware of the meeting. Canadian government bond yields were lower across a flatter curve. The 10-year fell 3.1 basis points to 0.582%, extending its pullback from a two-month high last Thursday at 0.642%. (Reporting by Fergal Smith Editing by Paul Simao and Marguerita Choy)
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