CANADA FX DEBT-C$ hits 3-week low as U.S. yields extend climb

 (New throughout, updates prices and market activity, adds
comment from strategist)
    * Canadian dollar at C$1.2846, or 77.85 U.S. cents
    * Loonie touches its weakest level since April 3 at C$1.2897
    * 10-year yield touches highest since Feb. 15 at 2.376

    By Fergal Smith
    TORONTO, April 25 (Reuters) - The Canadian dollar fell on
Wednesday to its lowest in more than three weeks against its
U.S. counterpart, as the greenback added to recent gains against
a basket of major currencies.
    At 4 p.m. EDT (2000 GMT), the Canadian dollar          was
trading 0.1 percent lower at C$1.2846 to the greenback, or 77.85
U.S. cents. The currency touched its weakest level since April 3
at C$1.2897.
    "It has mostly been a U.S. dollar story," said Mark
Chandler, head of Canadian fixed income and currency strategy.
"It is getting some support finally from having U.S. yields
    The greenback        notched a four-month high as benchmark
U.S. Treasury yields climbed further above 3 percent.
    Improved prospects for a deal to revamp the North American
Free Trade Agreement have supported the loonie but have been
offset by some recent soft domestic data and last week's
interest rate announcement by the Bank of Canada, Chandler said.
    The loonie has declined 2.3 percent after the central bank
held its benchmark interest rate steady at 1.25 percent and said
it did not know when or how aggressive it would need to be to
keep inflation in check.             
    Still, Bank of Canada Governor Stephen Poloz said on
Wednesday in an appearance before the Senate Standing Committee
on Banking, Trade and Commerce that he was much more encouraged
by the economy compared to previous testimony in
    Canadian Foreign Minister Chrystia Freeland reiterated
Canada's opposition to proposed U.S. steel and aluminum tariffs
due to come into force next week, as pressure mounts to seal a
quick deal on updating NAFTA.              
    U.S. crude oil futures        settled 0.5 percent higher at
$68.05 a barrel as investors shrugged off data showing rising
domestic fuel inventories and production. Oil is one of Canada's
major exports.
    Canadian government bond prices were lower across a steeper 
yield curve in sympathy with U.S. Treasuries. The two-year
           fell 2.5 Canadian cents to yield 1.932 percent and
the 10-year             declined 15 Canadian cents to yield
2.375 percent.
    The 10-year yield touched its highest intraday since Feb. 15
at 2.376 percent.             

 (Reporting by Fergal Smith; editing by Jonathan Oatis and David