CANADA FX DEBT-C$ hits fresh 14-month low after oil selloff

    * Canadian dollar at C$1.3766, or 72.64 U.S. cents
    * Loonie touches weakest since February 2016 at C$1.3793
    * Bond prices slightly lower across the yield curve
    * 2-year spread vs Treasuries hits widest in 10 years

    By Fergal Smith
    TORONTO, May 5 (Reuters) - The Canadian dollar weakened to a
fresh 14-month low against its U.S. counterpart on Friday as
U.S. oil prices traded below $44 a barrel before paring losses,
while the domestic economy added fewer jobs than expected in
    Employers added 3,200 jobs last month, short of economists'
forecasts for a gain of 10,000. The unemployment rate
unexpectedly fell to 6.5 percent from 6.7 percent, the lowest
since October 2008.
    That followed a string of robust job gains over the past few
months. But tame wage growth added to the reasons for the Bank
of Canada to stay sidelined, said Paul Ferley, assistant chief
economist at Royal Bank of Canada.
    "It's not getting any indication of pressure on the
inflation front and they are still concerned about potential
trade protectionism emerging in the U.S., so I think they stay
cautious," he said.  
     U.S. President Donald Trump said last week he would
terminate the North American Free Trade Agreement with Canada
and Mexico if negotiations on the accord became "unserious."
    Price of oil, one of Canada's major exports, fell to fresh
five-month lows on concerns about a persistent glut despite
assurances from Saudi Arabia that Russia was ready to join
Organization of the Petroleum Exporting Countries in extending
supply cuts.             
    U.S. crude        prices were down 0.29 percent at $45.39 a
    At 9:15 a.m. ET (1315 GMT), the Canadian dollar          was
trading at C$1.3766 to the greenback, or 72.64 U.S. cents, down
0.1 percent, according to Reuters data.
    The currency's strongest level of the session was C$1.3748,
while it touched its weakest since February 2016 at C$1.3793.
    Modest losses for the loonie came as U.S. jobs data showed
signs of a tightening labor market that could seal the case for
a Federal Reserve interest rate increase next month.
    Canadian government bond prices were slightly lower across
the yield curve in sympathy with U.S. Treasuries. The two-year
           fell 1.5 Canadian cents to yield 0.691 percent and
the 10-year             declined 10 Canadian cents to yield
1.549 percent.
    The 2-year yield fell 1.3 basis points further below its
U.S. equivalent to a spread of -63.9 basis points, its widest
since April 2007.

 (Reporting by Fergal Smith; Editing by Meredith Mazzilli)