CANADA FX DEBT-C$ notches 10-day high as GDP data boosts rate hike bets

    * Canadian dollar at C$1.3200, or 75.76 U.S. cents
    * Canadian GDP rises 0.1 percent in April
    * Loonie hits strongest since June 19 at C$1.3200
    * Bond prices lower across a flatter yield curve

    By Fergal Smith
    TORONTO, June 29 (Reuters) - The Canadian dollar
strengthened to a 10-day high against its U.S. counterpart on
Friday after a surprise expansion of the domestic economy in
April raised expectations for a Bank of Canada interest rate
hike next month.
    The Canadian economy grew by 0.1 percent in April, even
though bad weather affected major sectors such as retail trade
and construction, Statistics Canada data indicated. Analysts had
predicted no change from March.              
    "Good enough data, the bank should hike," said Greg
Anderson, global head of foreign exchange strategy in New York
at BMO Capital Markets.
    Chances of an interest rate hike at the July 11 announcement
jumped to more than 80 percent from 67 percent before the data,
the overnight index swaps market indicated.           
    At 9:12 a.m. EDT (1312 GMT), the Canadian dollar         
was trading 0.4 percent higher at C$1.3200 to the greenback, or
75.76 U.S. cents, its strongest since June 19.
    Month-end and quarter-end trading could support the loonie
due to the counter-trend nature of those flows, Anderson said.
    For the quarter, the loonie is on track to fall 2.3 percent.
    Investors will also be paying close attention to the Bank of
Canada Business Outlook Survey, due for release at 10:30 a.m.
EDT (1430 GMT).
    The price of oil, one of Canada's major exports, held near
3-1/2 year highs as U.S. sanctions against Iran threatened to
remove a substantial volume of crude oil from world markets at a
time of rising global demand.             
    U.S. crude oil futures        rose 0.3 percent to $73.66 a
    Canadian government bond prices were lower across a flatter
yield curve, with the 10-year             falling 19 Canadian
cents to yield 2.155 percent. The 10-year yield touched its
highest intraday since June 22 at 2.164 percent.  

 (Reporting by Fergal Smith; Editing by Bernadette Baum)