CANADA FX DEBT-C$ weakens as oil falls, risk appetite fades

(Adds analyst quote, updates prices)
    * Canadian dollar ends at C$1.2713, or 78.66 U.S. cents
    * Bond prices mixed across a flatter maturity curve
    * 10-year yield hits lowest since Feb. 29 at 1.149 percent

    By Fergal Smith
    TORONTO, June 9 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Thursday as oil prices moved
lower and risk appetite waned.
    Losses for the loonie came one day after it strengthened to
a five-week high at C$1.2655 as expectations dwindled that the
U.S. Federal Reserve will move to hike interest rates again
    "We think that the Canadian dollar - the strength that we
have seen earlier this year and more recently - we think there
is limited room for further strength," said Eric Viloria, a
currency strategist at Wells Fargo.
    Firming economic growth, a recovery in commodities prices
and the shift in expectations for monetary policy for both
Canada and the United States will become less supportive factors
for the currency, he added.
    Oil prices fell, snapping a three-day rally after notching
another 2016 high, as a strong dollar sparked profit-taking in
crude futures. U.S. crude prices settled 67 cents lower
at $50.56 a barrel. 
    Slippage in global stocks provided an additional headwind
for the risk-sensitive commodity-linked Canadian dollar. U.S.
stocks retreated after three straight days of gains.
    The Canadian dollar ended at C$1.2713 to the
greenback, or 78.66 U.S. cents, slightly weaker than Wednesday's
close of C$1.2696, or 78.76 U.S. cents.
    The currency's strongest level of the session was C$1.2670,
while its weakest was C$1.2767.
    Canadian industries ran at 81.4 percent of capacity in the
first quarter, up from 80.9 percent in the previous quarter and
new home prices in Canada rose 0.3 percent in April from March,
data from Statistics Canada showed.  
    Canadian employment data for May will be released on Friday.
The report comes after a massive wildfire last month cut
production in Alberta's oil sands region. 
    The Bank of Canada has said it expects damage from the
wildfire to shave 1.25 percentage points off economic growth in
the second quarter, which could put the quarter on pace for a
    Canadian government bond prices were mixed across a flatter
curve, with the two-year price flat to yield 0.52
percent and the benchmark 10-year rising 16 Canadian
cents to yield 1.184 percent.
    The 10-year yield hit its lowest since Feb. 29 at 1.149

 (Reporting by Fergal Smith, editing by G Crosse)