CANADA FX DEBT-C$ hits 14-month low, oil plunge offsets jump in exports

 (Adds analyst quotes and details on speculators and updates
    * Canadian dollar at C$1.3765, or 72.65 U.S. cents
    * Loonie touches its weakest since February 2016 at C$1.3778
    * Bond prices higher across the yield curve
    * 2-year spread vs Treasuries touches its widest in 10 years

    By Fergal Smith
    TORONTO, May 4 (Reuters) - The Canadian dollar weakened to a
fresh 14-month low against its U.S. counterpart on Thursday as a
slump in oil prices offset narrowing in the country's trade
    At 4 p.m. EDT (2000 GMT), the Canadian dollar          was
trading at C$1.3765 to the greenback, or 72.65 U.S. cents, down
0.3 percent, according to Reuters data.
    The currency touched its weakest since February 2016 at
    "It's building on momentum that has developed over the last
several sessions, basically a perfect storm of bad news," said
Mazen Issa, senior FX strategist at TD Securities.
    Worries over funding problems at Canadian alternative
mortgage lenders added to ongoing fears of a trade war with the
United States and low oil prices.             
    U.S. crude oil futures        settled 4.8 percent lower at
$45.52 a barrel on signs major producers would not take more
drastic steps to reduce a supply glut.      
    "It has pushed a lot of people in the speculative community
to sell the Canadian dollar," Issa said.
    Speculators have ramped up bearish bets on the Canadian
dollar to the most since February 2016, data from the Commodity
Futures Trading Commission and Reuters calculations showed last
    Canada posted a trade deficit of C$135 million in March,
down from a revised C$1.08 billion shortfall in February, as
exports hit a record high on energy shipments.             
    "A strong first indicator on March GDP (gross domestic
product) suggests that there could be some decent momentum
heading into the second quarter," said Nick Exarhos, economist
at CIBC Capital Markets.
    The Canadian dollar will regain some ground over the coming
months, a Reuters poll showed on Wednesday, as a pickup in the
domestic economy could prod the Bank of Canada to raise interest
rates by next year.             
    Canadian government bond prices were higher across the yield
curve even as U.S. Treasuries lost ground on expectations the
Federal Reserve was likely to raise interest rates again in
    Canada's 10-year             rose 12 Canadian cents to yield
1.532 percent, while the 2-year yield fell 2.5 basis points
further under its U.S. equivalent to a spread of -62.1 basis
points, its widest since April 2007.
    Canada's April employment report is due on Friday.         

 (Reporting by Fergal Smith; Editing by Chris Reese)