CANADA FX DEBT-C$ weakens as oil retreats, erodes last week's gains

* Canadian dollar at C$1.2974, or 77.08 U.S. cents
    * Bond prices slightly lower across the maturity curve
    * 10-year yield touches a three-week high at 1.147 percent

    TORONTO, July 18 (Reuters) - The commodity-linked Canadian
dollar edged lower against its U.S. counterpart on Monday,
paring last week's gains as oil prices retreated.
    Oil prices fell as traders shrugged off the impact of the
attempted coup in Turkey and the market turned its attention to
bearish fundamentals. U.S. crude prices were down 1.65
percent at $45.19 a barrel. 
    At 9:22 a.m. EDT (1322 GMT), the Canadian dollar 
was trading at C$1.2974 to the greenback, or 77.08 U.S. cents,
weaker than Friday's close of C$1.2937, or 77.30 U.S. cents.
    The currency's strongest level of the session was C$1.2931,
while its weakest was C$1.2977.
    Still, the loonie rose 0.8 percent last week as a somewhat
optimistic update from the Bank of Canada lowered expectations
for an interest rate cut. 
    The implied probability of a rate cut this year has fallen
below 10 percent, overnight index swaps data showed. It had been
above 30 percent in the week following the British referendum
vote on June 23 to leave the European Union. 
    Foreign investors snapped up relatively large amounts of
Canadian securities for the fifth month in a row in May,
purchasing a net C$14.73 billion worth, Statistics Canada said
on Monday. 
    Speculators increased bullish bets on the loonie for the
third straight week, Commodity Futures Trading Commission data
showed on Friday. Net long Canadian dollar positions rose to
17,175 contracts in the week ended July 12 from 11,517 contracts
in the prior week. 
    On Monday, Canadian government bond prices were slightly
lower across the maturity curve, with the two-year 
price down 0.5 Canadian cent to yield 0.572 percent and the
benchmark 10-year falling 5 Canadian cents to yield
1.087 percent.
    The 10-year yield touched its highest since June 27 at 1.147
    Canadian small business lending picked up slightly in May
from April to halt a five-month slide, PayNet data showed on
Monday, but appetite for loans remained subdued and a measure of
delinquencies hit its highest since 2011. 
    Canadian retail sales data for May and inflation data for
June are awaited on Friday.

 (Reporting by Fergal Smith Editing by W Simon)