CANADA FX DEBT-C$ recovers from a near 4-week low as oil prices climb

    * Canadian dollar at C$1.2676, or 78.89 U.S. cents
    * Loonie touches its weakest since July 14 at C$1.2735
    * Bond prices move higher across a flatter yield curve

    TORONTO, Aug 10 (Reuters) - The Canadian dollar edged higher
on Thursday against its U.S. counterpart, recovering from an
earlier near four-week low as higher oil prices offset
U.S.-North Korea tensions.
    U.S. crude        prices were up 1.05 percent at $50.08 a
barrel, lifted by a sustained decline in inventories and as
Saudi Arabia prepared to cut crude supplies to its prized Asian
    Oil is one of Canada's major exports.
    On global markets, simmering tensions between the United
States and North Korea weighed on stocks and supported
safe-haven currencies, such as the Japanese yen.             
    As a major commodity producer, Canada could be hurt if
geopolitics hampers global trade.
    At 9:16 a.m. ET (1316 GMT), the Canadian dollar          was
trading at C$1.2676 to the greenback, or 78.89 U.S. cents, up
0.2 percent.
    The currency's strongest level of the session was C$1.2673,
while it touched its weakest since July 14 at C$1.2735.
    New housing prices in Canada rose less than expected in June
as the Toronto market was unchanged for the first time in six
months following provincial government measures to rein in
gains, data from Statistics Canada showed.             
   Investors worry that a cooling in the housing market could
weigh on Canada's economy and slow the pace of additional
interest rate hikes.
    The Bank of Canada hiked rates in July for the first time in
nearly seven years. Economists expect another increase as soon
as October.             
    Canadian government bond prices were higher across a flatter
yield curve in sympathy with U.S. Treasuries, after data showing
the biggest drop in U.S. producer prices in 11 months further
reduced expectations of an interest rate hike by the Federal
Reserve in December.             
    The 10-year             bond rose 16 Canadian cents to yield
1.888 percent, while the gap between the 2-year and 10-year
yields narrowed by 1.3 basis points to a spread of 65.5 bps, its
narrowest since July 24.

 (Reporting by Fergal Smith; Editing by W Simon)