CANADA FX DEBT-C$ firms against weaker greenback as NAFTA talks loom

    * Canadian dollar at C$1.2711, or 78.67 U.S. cents
    * Loonie touches its weakest since Wednesday at C$1.2755
    * Bond prices lower across much of the yield curve

    TORONTO, Nov 14 (Reuters) - The Canadian dollar strengthened
against its U.S. counterpart on Tuesday as the greenback broadly
fell, while investors turned their attention to the resumption
of NAFTA renegotiations later this week.
    The U.S. dollar        retreated against a basket of major
currencies after strong German economic growth data drove the
euro to a three-week high.                 
    U.S., Canadian and Mexican negotiators hope to make modest
progress in the next round of North American Free Trade
Agreement talks in Mexico City this week.             
    NAFTA working groups are due to begin meeting from
Wednesday. On Friday, talks will formally get underway through
Nov. 21.
    At 9:23 a.m. ET (1423 GMT), the Canadian dollar          was
trading at C$1.2711 to the greenback, or 78.67 U.S. cents, up
0.2 percent.
    The currency's strongest level of the session was C$1.2701,
while it touched its weakest since last Wednesday at C$1.2755.
    The gain for the Canadian dollar came despite the third
straight day of declining prices of oil, one of Canada's major
    U.S. crude        prices were down 0.37 percent at $56.55 a
    The Canadian dollar is unlikely to recapture its tight link
with the price of oil even as the interest rate outlook settles,
given that crude trades are far removed from levels needed to
affect investment in Canada's energy sector, economists and
strategists say.             
    Speculators have cut bullish bets on the Canadian dollar,
data from the U.S. Commodity Futures Trading Commission and
Reuters calculations showed on Monday.              
    As of Nov. 7, Canadian dollar net long positions had slipped
to 50,889 contracts from 57,839 a week earlier.
    Canadian government bond prices were lower across much of
the yield curve, with the two-year            down 3.5 Canadian
cents to yield 1.481 percent and the 10-year             falling
11 Canadian cents to yield 1.983 percent.
    Canada's manufacturing sales data for September is due on
Thursday and the October inflation report will be released on
    Economists expect the annual inflation rate to have cooled
to 1.4 percent in October, which could give the Bank of Canada
room to take its time raising interest rates after two
back-to-back hikes earlier this year.

 (Reporting by Fergal Smith, Editing by Rosalba O'Brien)