CANADA FX DEBT-Canadian dollar weakens as U.S.-Iran tensions curb risk appetite

 (Adds dealer quotes and details throughout; updates prices)
    * Canadian dollar weakens 0.1% against the greenback
    * For the week, the loonie was up 0.7%
    * Price of U.S. oil rises 3.1%
    * Canadian bond prices rise across a flatter yield curve

    By Fergal Smith
    TORONTO, Jan 3 (Reuters) - The Canadian dollar edged lower
against its U.S. counterpart on Friday, paring some of this
week's rally as rising geopolitical tensions in the Middle East
weighed on risk appetite. 
    At 3:17 p.m. (2017 GMT), the Canadian dollar          was
trading 0.1% lower at 1.2994 to the greenback, or 76.96 U.S.
cents. The currency, which notched a 14-month high on Tuesday at
1.2952, traded in a range of 1.2961 to 1.3005.
    For the week, it was up 0.7%.
    "It's going to be difficult for Canada to make headway, at
least in the current risk-off environment," said Michael Goshko,
corporate risk manager at Western Union Business Solutions.
"Tensions in the Middle East are never good for risk, or for
    Wall Street fell from a record high on Thursday after a U.S.
air strike in Iraq, killing a top Iranian military commander,
ratcheted up regional tensions.                 
    Canada is a major exporter of commodities, including oil and
runs a current account deficit, so its economy could be hurt by
a slowdown in the global flow of trade or capital.
    Oil prices jumped to the highest level in more than three
months on fears the increased Mideast tensions could disrupt
global oil supplies. U.S. crude oil futures        settled 3.1%
higher at $63.05 a barrel.             
    The loonie has benefited in recent weeks from an easing of
the U.S.-China trade conflict and signs of recovery in the
global economy.
    It strengthened 5% in 2019, making it the top performing G10
currency, as the Bank of Canada kept interest rates on hold
throughout the year even as some major central banks such as the
Federal Reserve and the European Central Bank eased.
    Canadian government bond prices were higher across a flatter
yield curve on Friday, with the two-year            up 8.5
Canadian cents to yield 1.614% and the 10-year            
rising 75 Canadian cents to yield 1.540%.
    The 10-year yield touched its lowest intraday level since
Dec. 4 at 1.539%.

 (Reporting by Fergal Smith; Editing by Steve Orlofsky and Tom