CANADA FX DEBT-C$ edges higher, boosted by manufacturing sales gain

    * Canadian dollar at C$1.2750, or 78.43 U.S. cents
    * Manufacturing sales rise 0.5 percent in September
    * Bond prices lower across the yield curve

    By Fergal Smith
    TORONTO, Nov 16 (Reuters) - The Canadian dollar strengthened
against its U.S. counterpart on Thursday as data showing a
surprise rise in domestic manufacturing sales in September
offset lower oil prices.
    The 0.5 percent increase in manufacturing sales topped
economists' forecasts for a 0.3 percent decline, while volumes
rose 0.7 percent.             
    The data was "modestly positive for the Canadian dollar,"
Nick Exarhos, an economist at CIBC Capital Markets, said in a
research report. "But the narrow scope of the increase and the
still troubling trend in export volumes continues to point to
reasons for concern ahead."
    Prices of oil, one of Canada's major exports, dipped on
rising U.S. crude production and inventories.             
    U.S. crude        prices were down 0.27 percent at $55.18 a
    Investors have also been focusing this week on the
resumption of North American Free Trade Agreement
renegotiations. NAFTA working groups began meeting on Wednesday
in Mexico. Talks will begin on Friday and continue through Nov.
     A cautious approach to monetary policy may be prudent
during times of uncertainty like today, but caution has its
limits because the trade-off can be financial instability, Bank
of Canada Senior Deputy Governor Carolyn Wilkins said on
    At 9:20 a.m. ET (1420 GMT), the Canadian dollar          was
trading at C$1.2750 to the greenback, or 78.43 U.S. cents, up
0.1 percent.
    The currency traded in a narrow range of C$1.2742 to
    Canadian companies cut 5,700 workers from their payrolls in
October, with the loss concentrated in the goods-producing
sector, according to a new employment report from ADP.
    Foreign investors bought a net C$16.81 billion in Canadian
securities in September, led by Canadian bonds, following a
revised C$9.77 billion acquisition in August, Statistics Canada
    Canadian government bond prices were lower across the yield
curve in sympathy with U.S. Treasuries as global markets
regained some of their risk appetite after a sharp sell-off in
stocks over the past week.
    The two-year            fell 2.5 Canadian cents to yield
1.462 percent and the 10-year             declined 19 Canadian
cents to yield 1.938 percent.
    Canada is due to auction C$500 million of its ultra-long
bonds at 12:00 p.m. ET (1700 GMT).
    The country's inflation report for October will be released
on Friday.

 (Reporting by Fergal Smith; Editing by Susan Thomas)