CANADA FX DEBT-C$ hovers near recent 7-week high ahead of BoC rate decision

    * Canadian dollar at C$1.2571, or 79.55 U.S. cents
    * Bond prices mixed across flatter yield curve

    TORONTO, April 17 (Reuters) - The Canadian dollar steadied
against its U.S. counterpart on Tuesday, holding near last
week's seven-week high, as investors digested
stronger-than-expected domestic manufacturing data ahead of a
Bank of Canada interest rate decision on Wednesday.
    Canadian factory sales grew by 1.9 percent in February from
January on higher sales in the transportation equipment
industry, Statistics Canada said. Analysts had forecast an
increase of 1.0 percent.             
    "After a cool start to the year, factories were humming
again in February," Royce Mendes, a senior economist at CIBC
Capital Markets, said in a research note.
    Money markets do not expect the Bank of Canada to raise
interest rates this week. But central bank optimism about the
country's economic outlook could raise expectations for a hike
as soon as next month.           
    At 9:14 a.m. EDT (1314 GMT), the Canadian dollar         
was trading 0.1 percent lower at C$1.2571 to the greenback, or
79.55 U.S. cents.
    The currency traded in a narrow range between C$1.2550 to
C$1.2579. On Wednesday, it reached its strongest level in more
than seven weeks at C$1.2545.
    The modest decline for the loonie came as the price of oil,
one of Canada's major exports, fell despite investors' growing
concern over the potential for disruptions to crude supply,
especially in the Middle East.             
    U.S. crude        prices were down 0.7 percent at $65.77 a
    The ministers leading the renegotiation of the North
American Free Trade Agreement could meet again on Thursday in
Washington as they push for quick progress, Mexican Economy
Minister Ildefonso Guajardo said on Monday.             
    Canada sends about 75 percent of its exports to the United
States. Its economy could benefit if a deal is reached to revamp
    Canadian government bond prices were mixed across a flatter
yield curve, with the two-year            price down 0.5
Canadian cent to yield 1.881 percent and the benchmark 10-year
            rising 6 Canadian cents to yield 2.266 percent.
    On Monday, the 10-year yield touched its highest level in
nearly four weeks at 2.292 percent.

 (Reporting by Fergal Smith; Editing by Bernadette Baum)