CANADA FX DEBT-C$ barely higher ahead of Bank of Canada update

(New throughout, updates prices and market activity to close,
adds analyst comment)
    * Canadian dollar ends at C$1.3119, or 76.23 U.S. cents
    * Bond prices higher across the yield curve

    By Alastair Sharp
    TORONTO, Oct 18 (Reuters) - The Canadian dollar notched a
marginal gain against its U.S. counterpart on Tuesday as oil
prices rose and domestic manufacturing data reinforced a view
that economic growth rebounded in the third quarter.
    The currency hit a nearly three-week intraday high before
paring most of those gains, with investors turning their
attention to the Bank of Canada, which is due to release its
latest economic forecasts along with an interest rate decision
on Wednesday.
    "The market is braced for downgrades to growth, and the main
risk is that they don't come," said Adam Button, a currency
analyst at ForexLive in Montreal, suggesting the currency could
see further strength. 
    "Growth has been resilient, oil prices are up, and
government is spending," he said. "Those are three factors that
are tough to fight."
    Manufacturing sales rose by 0.9 percent from July to hit
C$51.12 billion, stronger than the 0.2 percent gain market
analysts polled by Reuters had forecast. In volume terms, sales
climbed by 1.2 percent.
    The Canadian dollar settled at C$1.3119 to the
greenback, or 76.23 U.S. cents, stronger than Monday's close of
C$1.3130, or 76.16 U.S. cents.
    The currency's weakest level of the session was C$1.3139,
while it touched its strongest since Sept. 29 at C$1.3051.
    U.S. crude prices extended gains after the settlement
as industry data showed a surprise draw in U.S. crude
    Rising commodity prices helped pull global stock markets
    Canadian government bond prices were higher across the yield
curve, with the two-year price up 2 Canadian cents to
yield 0.592 percent and the benchmark 10-year rising
24 Canadian cents to yield 1.195 percent.
    EU governments failed to approve a free trade agreement with
Canada on Tuesday, as continued opposition from French-speaking
southern Belgium threatened the entire deal. 

 (Additional reporting by Fergal Smith; Editing by Bill Trott)