CANADA FX DEBT-C$ climbs against U.S. dollar; oil near 2 1/2-year peak

    * Canadian dollar at C$1.2540, or 79.74 U.S. cents
    * Bond prices lower across the yield curve

    TORONTO, Jan 2 (Reuters) - The Canadian dollar strengthened
against its U.S. counterpart on Tuesday, the first trading day
of 2018, as the greenback broadly fell and the price of oil held
near its highest in 2-1/2 years.
    The U.S. dollar        retreated against a basket of major
currencies as data showing a faster pace of euro zone
manufacturing activity boosted the euro.             
    The price of oil, one of Canada's major exports, touched its
highest intraday since mid-2015 amid large anti-government
rallies in Iran and ongoing supply cuts led by OPEC and Russia.
    U.S. crude        prices were little changed at $60.40 a
    At 9:29 a.m. ET (1429 GMT), the Canadian dollar          was
trading at C$1.2540 to the greenback, or 79.74 U.S. cents, up
0.3 percent from Friday's close.
    The currency traded in a narrow range of C$1.2521 to
    On Friday, the loonie touched its strongest intraday level
in more than two months at C$1.2515, helped by recent domestic
data which showed an acceleration in inflation and strength in
retail sales. The currency ended 2017 with a gain of nearly 7
    Still, speculators have cut bullish bets on the Canadian
dollar to the lowest since July, data from the U.S. Commodity
Futures Trading Commission and Reuters calculations showed on
Friday. As of Dec. 26, net long positions had fallen to 17,346
contracts from 45,901 a week earlier.
    Canadian government bond prices were lower across the yield 
curve, with the two-year            down 1.5 Canadian cents to
yield 1.694 percent and the 10-year             falling 14
Canadian cents to yield 2.06 percent.
    The 10-year yield touched its highest intraday since Oct. 25
at 2.068 percent.
    Canada's employment report for December and November trade
data is due on Friday.

 (Reporting by Fergal Smith; Editing by Bernadette Baum)