CANADA FX DEBT-C$ pares its recent decline as oil prices rally

    * Canadian dollar rises 0.4 percent against the greenback
    * Price of U.S. oil rises nearly 2 percent
    * Canada manufacturing PMI falls to nearly 2-year low
    * Canadian bond prices rise across a flatter yield curve
    * Canada's 10-year yield hits its lowest in more than one

    TORONTO, Jan 2 (Reuters) - The Canadian dollar strengthened
against its broadly stronger U.S. counterpart on Wednesday,
paring some of its 2018 decline as higher oil prices offset
domestic data showing a slowdown in manufacturing growth.
    The IHS Markit Canada Manufacturing Purchasing Managers'
index fell to a seasonally adjusted 53.6 in December, its lowest
in nearly two years, from 54.9 in November, as production growth
faltered and export orders stagnated.             
    Signs of slower Canadian manufacturing growth came as weak
data in Asia and Europe added to fears of a global economic
    Still, stocks pared some earlier losses and the price of
oil, one of Canada's major exports, turned higher. U.S. crude
oil futures        were up nearly 2 percent at $46.31 a
    At 10:14 a.m. (1514 GMT), the Canadian dollar          was
trading 0.4 percent higher at 1.3597 to the greenback, or 73.55
U.S. cents. The currency, which touched on Friday its weakest
since May 2017 at 1.3665, traded in a range of 1.3570 to 1.3662.
    In 2018, the loonie declined 7.8 percent, its worst
performance in three years as oil prices plunged and
expectations dwindled for additional rate hikes in 2019 from the
Bank of Canada.           
    Canadian government bond prices were higher across a flatter
yield curve, with the two-year            up 3 Canadian cents to
yield 1.845 percent and the 10-year             rising 38
Canadian cents to yield 1.921 percent.
    The 10-year yield hit its lowest intraday since December
2017 at 1.871 percent.
    The country's employment report for December is due on

 (Reporting by Fergal Smith
Editing by Nick Zieminski)