CANADA FX DEBT-C$ slides to 3-week low on surprise drop in factory sales

    * Canadian dollar falls 0.5 percent against greenback
    * Canadian factory sales drop 1.3 percent in December
    * Price of U.S. oil drops 0.8 percent
    * Canadian bond prices rally across the yield curve

    By Fergal Smith
    TORONTO, Feb 14 (Reuters) - The Canadian dollar weakened to
its lowest in nearly three weeks against the greenback on
Thursday as oil prices fell and after domestic data showed a
drop in factory sales that could crimp estimates for how much
the economy grew in the fourth quarter.
    At 10:01 a.m. (1501 GMT), the Canadian dollar          was
trading 0.5 percent lower at 1.3327 to the greenback, or 75.04
U.S. cents. The currency touched its weakest level since Jan. 25
at 1.3331.    
    Canadian factory sales fell by 1.3 percent in December from
November on lower petroleum and coal product sales, Statistics
Canada said. Analysts had forecast an increase of 0.2 percent.
    "Refinery shutdowns in November don't look to have come back
online and the challenges only appear to have increased," Royce
Mendes, a senior economist at CIBC Capital Markets said in a
research comment.
    "The surprising fall in factory activity will take Q4 GDP
tracking forecasts below one percent ... soft GDP prints to
close out last year and begin this one will keep the Bank of
Canada on the sidelines for at least the next few months,"
Mendes said.
    The Bank of Canada has projected that growth slowed
temporarily in the fourth quarter of 2018 and the first quarter
of this year due mainly to lower prices for oil, one of Canada's
major exports. Money markets see chances of an interest rate
hike this year at less than 20 percent.           
    U.S. crude oil futures        fell 0.8 percent to $53.45 a
barrel on Thursday, reducing some of this week's gains, and U.S.
stocks edged lower as a sharp drop in U.S. retail sales in
December offset investor optimism that the United States and
China could resolve their trade dispute.
    Canadian government bond prices were higher across the yield
curve in sympathy with U.S. Treasuries. The two-year           
rose 9.5 Canadian cents to yield 1.763 percent and the 10-year
            climbed 55 Canadian cents to yield 1.870 percent.  

 (Reporting by Fergal Smith; Editing by Bernadette Baum)