CANADA FX DEBT-C$ strengthens to a 4-week high as oil rallies

* Canadian dollar at C$1.2944, or 77.26 U.S. cents
    * Loonie touches its strongest since July 15 at C$1.2926
    * Bond prices higher across flatter maturity curve

    TORONTO, Aug 12 (Reuters) - The Canadian dollar strengthened
to a four-week high against its U.S. counterpart on Friday as
oil rallied and weaker-than-expected U.S. data weighed on the
    The U.S. dollar fell 0.4 percent against a basket of
major currencies after U.S. data showed that retail sales were
unexpectedly flat in July. 
    Oil prices rose, supported by the prospect of talks by
exporters about ways to prop up a market grappling with a supply
overhang. U.S. crude prices were up 0.8 percent to $43.75
a barrel. 
    Adding to support for Canada's risk-sensitive currency,
world stocks were headed for their fourth week of gains in five
after Wall Street's three main indexes rose to coordinated
record highs on Thursday for the first time since 1999.
    At 9:28 a.m. EDT (1328 GMT), the Canadian dollar 
traded at C$1.2944 to the greenback, or 77.26 U.S. cents,
stronger than Thursday's close of C$1.2980, or 77.04 U.S. cents.
    The currency's weakest level of the session was C$1.2993,
while it touched its strongest since July 15 at C$1.2926.
    Canada's Teranet-National Bank Composite House Price Index
showed national home prices rose 2.0 percent last month from
June. Prices were up 10.9 percent from a year earlier.
    Canadian government bond prices were higher across the
maturity curve in sympathy with U.S. Treasuries as expectations
dipped for a Federal Reserve rate hike this year.
    The two-year price rose 4.5 Canadian cents to
yield 0.515 percent and the benchmark 10-year 
climbed 37 Canadian cents to yield 0.992 percent.
    The curve flattened as the spread between the 2-year and
10-year yields narrowed by 1.6 basis points to 47.7, its
narrowest gap since June 2008, indicating outperformance for
longer-dated maturities.

 (Reporting by Fergal Smith; Editing by Jeffrey Benkoe)