CANADA FX DEBT-C$ holds near three-week high amid auto trade optimism

    * Canadian dollar at C$1.3132, or 76.15 U.S. cents
    * Bond prices trade little changed across the yield curve

    TORONTO, July 5 (Reuters) - The Canadian dollar edged higher
against its U.S. counterpart on Thursday, holding near its
strongest in nearly three weeks, as the greenback broadly fell
and investors' hopes rose that European carmakers could be
spared from U.S. tariffs.
    At 9:35 a.m. EDT (1335 GMT), the Canadian dollar         
traded 0.1 percent higher at C$1.3132 to the greenback, or 76.15
U.S. cents. The currency traded in a range of C$1.3116 to
    On Wednesday, the loonie touched its strongest since June 15
at C$1.3113 as investors braced for a potential Bank of Canada
interest rate hike next week.
    Stocks rose on signs that Washington may ease back on plans
for tariffs on European cars, with automaker shares higher
across the board, offsetting further signs of trade tension with
    Canada runs a current account deficit so its economy could
be hurt if the flow of trade or capital slows.
    The country has its own trade dispute with the United States
and is contending with slow-moving talks to revamp the North
American Free Trade Agreement, while U.S. President Donald Trump
has threatened to impose tariffs on Canada's autos.
    The U.S. dollar        fell against a basket of major
currencies as strong German industrial orders and hopes over a
softening in U.S. trade rhetoric boosted the euro.             
    The price of oil, one of Canada's major exports, held near
its highest in 3-1/2 years, boosted by potential disruptions to
flows from Iran and the Middle East. Also in the mix was a fresh
demand from U.S. President Donald Trump that the Organization of
the Petroleum Exporting Countries cut prices.             
    U.S. crude        prices were down 0.4 percent to $73.84 a
    Canadian government bond prices were little changed, with
the two-year            flat to yield 1.913 percent and the
10-year             rising 1 Canadian cent to yield 2.162
     Canadian auto sales slipped for the fourth straight month
in June, declining 1.6 percent from a year earlier, according to
industry data released on Wednesday.             
    Canada's employment report for June and trade data for May
are due out on Friday.

 (Reporting by Fergal Smith
Editing by Jeffrey Benkoe)