CANADA FX DEBT-C$ touches 1-1/2 month low as data lifts greenback

(Updates with strategist's comments, closing figures)
    * Canadian dollar at C$1.2535 or 79.78 U.S. cents
    * Bond prices mixed across the maturity curve

    By Solarina Ho
    TORONTO, June 1 (Reuters) - The Canadian dollar beat a sharp
retreat against its U.S. counterpart on Monday, hurt by oil
prices that fell on expectations that OPEC production levels
will stay elevated, while the greenback was lifted by economic
    The U.S. dollar rose against key currencies on figures that
showed stronger-than-expected manufacturing activity in May and
that construction spending picked up sharply in April, boosting
expectations a U.S. interest hike is likely this year.
    Those data points followed an unexpectedly flat April
reading of U.S. consumer spending that suggested the economy was
struggling to gain momentum early in the second quarter.
    "We have this underlying assumption that Q2 is going to be
better ... We just need to see a lot of data before we're 100
percent convinced that core assumption is correct," said Greg
Anderson, global head of foreign exchange strategy at BMO
Capital Markets in New York, who sees no chance the U.S. Federal
Reserve will move on rates in June.
    The Canadian dollar, which was underperforming its
currency counterparts, finished at C$1.2535 to the greenback, or
79.78 U.S. cents, softer than the Bank of Canada's official
close of C$1.2437, or 80.41 U.S. cents, on Friday.
    At one point on Monday, the currency touched its weakest
level in 1-1/2 months, trading at C$1.2563, far off its session
high of C$1.2440.
    Monday's numbers were the first of a raft of North American
data this week, culminating in U.S. and Canadian employment
figures for May on Friday.  
    "This is a good data point today, no question about it, but
the big data is on Friday. There's a limit to how far you want
to extend yourself long USD/CAD ahead of twin payrolls,"
Anderson said.
    Oil is a major Canadian export, and crude prices, which
couldn't replicate Friday's sharp gains, did little to support
the loonie. 
    U.S. crude prices were up 0.05 percent at $60.33,
while Brent crude lost 0.84 percent to $65.01.
    The Organization of the Petroleum Exporting Countries (OPEC)
will meet on Friday and is expected to keep production at high
levels, adding to concerns about excess global supply.
    Canadian government bond prices were mixed across the
maturity curve. The two-year price rose 1 Canadian
cent to yield 0.566 percent and the benchmark 10-year
 fell 9 Canadian cents to yield 1.634 percent.
    The Canada-U.S. two-year bond spread was -8.7 basis points,
while the 10-year spread was -54.7 basis points.

 (Reporting by Solarina Ho; Editing by Nick Zieminski; and Peter