CANADA FX DEBT-C$ eases to near three-month low as greenback rallies

 (Adds strategist quotes, details on activity; updates prices)
    * Canadian dollar at C$1.3092, or 76.38 U.S. cents
    * Loonie touches weakest since March 19 at C$1.3110
    * Price of U.S. oil rises 0.4 percent
    * Bond prices higher across flatter yield curve

    By Fergal Smith
    TORONTO, June 14 (Reuters) - The Canadian dollar weakened to
a nearly three-month low against its U.S. counterpart on
Thursday as the greenback climbed broadly and Italy added to
Canada's uncertain trade outlook.
    At 4 p.m. EDT (2000 GMT), the Canadian dollar          was
trading 0.8 percent lower at C$1.3092 to the greenback, or 76.38
U.S. cents, its biggest decline since March 13.
    The currency touched its weakest since March 19 at C$1.3110.
    "It is mostly a (U.S.) dollar move," said Erik Nelson, a
currency strategist at Wells Fargo. "We saw a pretty sharp
selloff in the euro."
    The U.S. dollar        rose against a basket of major
currencies after a signal by the European Central Bank that it
would keep interest rates at record lows through the summer of
2019 weighed on the euro.             
    Gains for the greenback came as U.S. data showing the
strongest rise in retail sales in six months supported
expectations that the Federal Reserve would raise interest rates
further. The Fed hiked rates on Wednesday.             
    The potential for the Bank of Canada to also hike, when it
makes its next interest rate decision in July, has helped the
loonie outperform against some other major currencies, Nelson
said, but added "the trade picture remains a downside risk."
    The Canadian dollar notched its strongest level against the
euro since June 5 at C$1.5118.
    Italy said it will not ratify the European Union's free
trade accord with Canada.             
    Canada is also contending with new U.S. tariffs on steel and
aluminum imports as well as slow-moving talks to modernize the
North American Free Trade Agreement, known as NAFTA.
    Canada agreed with the United States that talks to update
NAFTA should continue although they did not set a date for the
next round, Canadian Foreign Minister Chrystia Freeland said in
remarks casting further doubt on the chances of a deal this
    The ratio of Canadian debt to disposable income slipped in
the first quarter to a two-year low of 168.0 percent from 169.7
percent in the fourth quarter as disposable income grew,
Statistics Canada said.             
    U.S. crude oil futures        settled 0.4 percent higher as
a key supply-setting meeting of the Organization of the
Petroleum Exporting Countries loomed. Oil is one of Canada's
major exports.      
    Canadian government bond prices were higher across a flatter
yield curve in sympathy with U.S. Treasuries and German Bunds.
The benchmark 10-year             rose 29 Canadian cents to
yield 2.284 percent.

 (Reporting by Fergal Smith, editing by G Crosse)