* Canadian dollar dips 0.2 percent against the greenback * Canadian homes sales tumble 9.1 percent in February * Price of U.S. oil falls 1.1 percent * Canada's 10-year yield touches its lowest since June 2017 TORONTO, March 15 (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Friday, reducing its gains for the week as oil prices fell and domestic data showed a steep drop in home sales. Canadian homes sales tumbled 9.1 percent in February from the previous month to hit their lowest level since November 2012, the Canadian Real Estate Association said. The home sales decline offset separate data showing a stronger-than-expected rise in Canadian manufacturing sales. Factory sales were up by 1.0 percent in January from December, Statistics Canada said. Analysts surveyed by Reuters had forecast on average an increase of 0.4 percent. The price of oil, one of Canada's major exports, retreated as worries about the global economy and robust U.S. production put a brake on prices. U.S. crude oil futures were down 1.1 percent at $57.95 a barrel. At 9:35 a.m. (1335 GMT), the Canadian dollar was trading 0.2 percent lower at 1.3362 to the greenback, or 74.84 U.S. cents. The currency traded in a range of 1.3290 to 1.3372. For the week, the loonie was on track to rise 0.4 percent. The decline for the loonie on Friday came one day after Bank of Canada senior deputy governor Carolyn Wilkins said that rising global debt is slowing economic growth and making Canada, and the rest of the world, more vulnerable to another period of financial instability. Still, the Bank of Canada is unlikely to cut interest rates to support a flagging economy as long as job growth continues at a robust pace, an analysis of the central bank's response to past divergences in economic data suggests. Canadian government bond prices were higher across the yield curve in sympathy with U.S. Treasuries after data showing U.S. manufacturing output fell for a second straight month in February. The two-year rose 6.5 Canadian cents to yield 1.621 percent and the 10-year was up 38 Canadian cents to yield 1.712 percent. The 10-year yield touched its lowest intraday since June 2017 at 1.709 percent. (Reporting by Fergal Smith; Editing by David Gregorio)
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