CANADA FX DEBT-C$ hits new 7-month low, pressured by U.S. data, lower oil

* Canadian dollar at C$1.3398, or 74.64 U.S. cents
    * Loonie touches its weakest since March 9 at C$1.3420.
    * Bond prices mixed across the yield curve
    * 10-year yield touches a 10-day high at 1.261 percent

    TORONTO, Oct 28 (Reuters) - The Canadian dollar weakened to
set a seven-month low against its U.S. counterpart on Friday as
stronger-than-expected U.S. growth supported the greenback and
oil fell.
    Oil prices were set for their biggest weekly losses in six
weeks over doubts about whether producers can agree on cutting
output enough to curb a global glut that has weighed on markets
for two years. U.S. crude was down 1.23 percent at $49.11
a barrel. 
    The U.S. economy grew at its fastest pace in two years in
the third quarter as a surge in exports and a rebound in
inventory investment offset a slowdown in consumer spending.
    Still, U.S. business spending on equipment dropped for the
fourth straight quarter. Weak U.S. business investment has
hampered a long-awaited pickup in growth of Canada's non-energy
exports. (nL1N1AR0RY)    
    The loonie has been weakening since the Bank of Canada
acknowledged last week that it had considered cutting interest
rates at its policy meeting.
    At 9:17 a.m. EDT (1317 GMT), the Canadian dollar 
was trading at C$1.3398 to the greenback, or 74.64 U.S. cents,
slightly weaker than Thursday's close of C$1.3387, or 74.70 U.S.
    The currency's strongest level of the session was C$1.3374,
while it touched its weakest since March 9 at C$1.3420.    
    Canada will continue to act to ensure that lenders are
prudent and consumer debt is sustainable, Finance Minister Bill
Morneau said. His remarks come ahead of next week's fiscal and
economic update from the government. 
    Canadian government bond prices were mixed across the yield
curve, with the two-year up 1 Canadian cent to yield
0.578 percent and the benchmark 10-year falling 1
Canadian cent to yield 1.239 percent. 
    The 10-year yield touched its highest intraday level since
Oct. 18 at 1.261 percent.

 (Reporting by Fergal Smith; Editing by Lisa Von Ahn)