CANADA FX DEBT-C$ strengthens to 2-1/2-month high; up 1.8 pct for week

* Canadian dollar settles at C$1.3514, or 74.00 U.S. cents
    * Currency touched its highest since Dec. 8 at C$1.3505
    * Bond prices lower across the maturity curve

    By Marwa Siam-Abdou
    TORONTO, Feb 26 (Reuters) - The Canadian dollar strengthened
on Friday, touching a 2-1/2-month high against its broadly
stronger U.S. counterpart as an uptrend in crude oil prices and
a broad gain for equities helped lock in a 1.8 percent
appreciation for the week.
    Crude slipped slightly on Friday as investors cashed out big
weekly profits, while upbeat economic data out of the United
States also provided a boost to Canada, which does much of its
trade with its southern neighbor.  
    "Oil is stabilizing," said Jack Spitz, managing director of
foreign affairs at National Bank Financial, adding that trends
in the oil market give "some reason for optimism."
    The Canadian dollar settled at C$1.3514 to the
greenback, or 74.00 U.S. cents, stronger than Thursday's
official close of C$1.3541, or 73.85 U.S. cents.
    The currency's touched its strongest level since Dec. 8 at
C$1.3505, while its weakest was C$1.3564. 
    The loonie, as Canada's currency is colloquially known, had
hit a 12-year weak spot near C$1.47 in mid-January, but has
since recovered steadily. The currency has been helped by
stabilization in crude oil prices and the shifting of the fiscal
stimulus burden from the Bank of Canada to the Canadian
    Spitz said the currency's recent stronger range has
encouraged a more balanced market of buyers and sellers.
    Adding to support for the risk-sensitive commodity currency,
stock markets inched higher for the third day in five as G20
policymakers meeting in Shanghai sought to find common ground on
how to reboot a struggling global economy.    
    While the U.S. dollar softened against the loonie, the
greenback rose against a basket of major currencies, helped by
an upward revision to U.S. fourth quarter growth. 
    The implied probability of a Bank of Canada rate cut by
mid-year has dropped to 32 percent from around 60 percent at the
start of the week. 
    Canadian government bond prices were lower across the
maturity curve on reduced demand for safe haven assets. The
two-year price fell 5 Canadian cents to yield 0.519
percent and the benchmark 10-year was down 37
Canadian cents to yield 1.183 percent.

 (Additional reporting by Fergal Smith; Editing by Cynthia