CANADA FX DEBT-C$ rallies to 3-week high on oil price rise

(Adds analyst quotes, details on U.S stocks, updates prices)
    * Canadian dollar at C$1.4048, or 71.18 U.S. cents
    * Currency touches strongest level in three weeks at
    * Bond prices mixed across maturity curve

    By Fergal Smith
    TORONTO, Jan 28 (Reuters) - The Canadian dollar rallied to a
three-week high against its U.S. counterpart on Thursday as
higher oil and stock prices supported the risk-sensitive
currency, while weaker-than-expected U.S. data argued against
U.S. rate hikes.
    The currency extended its rally since the Bank of Canada
surprised many traders last week by leaving its policy rate on
hold at 0.50 percent.
    "We are seeing a bit of Canadian dollar strength being
driven by risk appetite really throughout global markets," said
Scott Smith, senior market analyst at Cambridge Global Payments
in Calgary.   
    Oil prices rose for the third straight day on hopes for a
deal to help clear a global supply glut. 
    Wall Street gained, helped by a blockbuster quarterly report
from Facebook that drove tech shares higher. 
    A 5.1 percent plunge in U.S. durable goods orders raised the
prospects of a lower U.S. gross domestic product number on
    "It really calls into question the Federal Reserve's
positioning on their overall interest rate trajectory over the
course of 2016," Smith said.
    The Canadian dollar closed at C$1.4048 to the
greenback, or 71.18 U.S. cents, stronger than the Bank of
Canada's Wednesday close of C$1.4103, or 70.91 U.S. cents.
    The currency touched its strongest level since Jan. 5 at
C$1.3948, while its weakest level was C$1.4120.
    Canadian average weekly earnings of non-farm payroll
employees were little changed in November, Statistics Canada
said. The number of non-farm payroll jobs decreased by 28,100 in
the same month following an increase of 43,300 in October.
    Canadian government bond prices were mixed across the
maturity curve, with the two-year price down 1.5
Canadian cents to yield 0.431 percent and the benchmark 10-year
 rising 7 Canadian cents to yield 1.239 percent.
    The Canada-U.S. two-year bond spread was 2.1 basis points
less negative at -39.4 basis points, while the 10-year spread
was 1 basis point less negative at -74.6 basis points as U.S.
Treasuries outperformed.
    Canadian gross domestic product data for November is awaited
on Friday, expected to show a rebound in growth after October's

 (Reporting by Fergal Smith; Editing by Nick Zieminski and Grant