CANADA FX DEBT-C$ near one-year low as trade tensions rise

    * Canadian dollar at C$1.3159, or 75.99 U.S. cents
    * Canadian manufacturing sales fall 1.3 percent in April 
    * Loonie hits weakest since June 28, 2017 at C$1.3176
    * Bond prices higher across a flatter yield curve

    TORONTO, June 15 (Reuters) - The Canadian dollar weakened to
approach a one-year low against its U.S. counterpart on Friday
as a trade spat between the U.S. and China intensified and
domestic data showed a surprise drop in manufacturing sales.
    Canadian manufacturing sales fell 1.3 percent in April from
March as maintenance shutdowns cut output at oil refineries,
Statistics Canada data indicated. Analysts in a Reuters poll had
forecast a 0.6 percent increase.             
    Separate data from the Canadian Real Estate Association
showed that resales of Canadian homes fell 0.1 percent in May
from April to the lowest level in more than five years.
    Global stocks fell after the United States announced tariffs
on $50 billion worth of Chinese goods, spurring a promise of
immediate and equivalent retaliation from Beijing.
    Canada runs a current account deficit, so its currency tends
to weaken when risk appetite sours. The country has its own
trade feud with the United States and is also in slow-moving
talks with the U.S. and Mexico to revamp the North American Free
Trade Agreement.    
    Canada agreed with the United States on Thursday that talks
to update NAFTA should continue although they did not set a date
for the next round, a senior official said in remarks casting
further doubt on the chances of a deal this year.             
    At 9:25 a.m. EDT (1325 GMT), the Canadian dollar         
was trading 0.4 percent lower at C$1.3159 to the greenback, or
75.99 U.S. cents. The currency touched its weakest level since
June 28, 2017 at C$1.3176.
    The price of oil, one of Canada's major exports, fell ahead
of an OPEC meeting in Vienna next week as two of the world's
biggest producers, Saudi Arabia and Russia, indicated they were
prepared to increase output.             
    U.S. crude        prices were down 0.4 percent at $66.63 a
    Foreign investment in Canadian securities reached a
five-month high in April as non-residents targeted the bond
market after four straight months of divestment, Statistics
Canada said. Outsiders bought a net C$9.13 billion of securities
in April, while Canadian investors reduced their holdings of
foreign securities by a net C$652 million.   
    Canadian government bond prices were higher across a flatter
yield curve in sympathy with U.S. Treasuries. The two-year
           rose 5.5 Canadian cents to yield 1.897 percent and
the 10-year             climbed 37 Canadian cents to yield 2.227

 (Reporting by Fergal Smith; Editing by Bernadette Baum)