CANADA FX DEBT-C$ hangs onto recent gains even as oil falls

 (Adds analyst quote and updates prices)
    * Canadian dollar at C$1.3219, or 75.65 U.S. cents
    * Bond prices lower across flatter yield curve
    * Gap between 2-year and 10-year yields hits narrowest since

    By Fergal Smith
    TORONTO, June 19 (Reuters) - The Canadian dollar was little
changed against its broadly firmer U.S. counterpart on Monday,
as the market digested big gains for the currency last week
after the Bank of Canada signaled that higher interest rates lie
    The loonie rose 1.9 percent last week, its biggest advance
in 18 months. It held onto those gains on Monday even as oil
prices fell and the U.S. dollar        climbed against a basket
of major currencies.
    "The Canadian dollar is showing resilience" due to the
central bank's shift to a more hawkish stance, said Eric
Viloria, currency strategist at Wells Fargo.
    Chances of a rate hike as early as next month have climbed
to one-in-three from nearly zero earlier this month, while a
rate hike has been fully priced in by December, data from the
overnight index swaps market shows.           
    The Bank of Canada's top two officials said last week that
rate cuts put in place in 2015 had largely done their work, and
the bank would assess whether rates need to be kept at
near-record lows.                 
    At 5 p.m. EDT (2100 GMT), the Canadian dollar          was
trading unchanged at C$1.3219 to the greenback, or 75.65 U.S.
    The currency traded in a range of C$1.3191 to C$1.3260. It
touched its strongest in 3-1/2 months on Wednesday at C$1.3165. 
    The greenback got a boost from comments by New York Federal
Reserve President William Dudley suggesting the central bank
remained on track to raise U.S. interest rates further despite
recent disappointing inflation data.             
    Prices of oil, one of Canada's major exports, fell to a
seven-month low as market players saw more signs that rising
crude production in the United States, Libya and Nigeria
undercut OPEC-led efforts to support the market with output
    U.S. crude oil futures CLc1 settled 54 cents lower at $44.20
a barrel.      
    Canadian government bond prices were lower across a flatter
yield curve in sympathy with U.S. Treasuries. The two-year
           fell 8.5 Canadian cents to yield 0.943 percent and
the 10-year             declined 16 Canadian cents to yield
1.540 percent.
    The gap between the 2-year and 10-year yields narrowed by
2.9 basis points to a spread of +59.7 basis points, its smallest
gap since Oct. 25, as shorter dated Canadian bonds
    Canadian wholesale trade data for April is due out on
Tuesday, while inflation data for May is due on Friday.         

 (Reporting by Fergal Smith; Editing by Bernadette Baum and
Sandra Maler)