CANADA FX DEBT-C$ weakens to 1-week low, losses pared after data

* Canadian dollar at C$1.3364, or 74.83 U.S. cents
    * Bond prices mixed across the maturity curve

    TORONTO, March 16 (Reuters) - The Canadian dollar weakened
to a one-week low against its U.S. counterpart on Wednesday as
markets braced for a Federal Reserve interest rate decision, but
losses were pared as oil prices rose and after firm domestic
    The U.S. dollar climbed against a basket of major
currencies, briefly extending gains after underlying U.S.
inflation increased more than expected in February. 
    The U.S. Federal Reserve is expected to hold interest rates
steady as it balances continued concerns about the health of the
global economy with fresh signs that domestic inflation is
starting to rear its head. 
    Canadian manufacturing sales rose 2.3 percent in January,
far more than expected, while sales volumes reached their
highest since before the 2008-2009 recession, data from
Statistics Canada showed. 
    Expiring currency hedges may give exporters a competitive
    Oil prices firmed on an announcement that producers will
meet next month in Qatar to discuss a proposal to freeze output
and on growing signs of a decline in U.S. crude production.
    U.S. crude prices were up 2.20 percent to $37.14 a
    At 9:20 a.m. EDT (1320 GMT), the Canadian dollar 
was trading at C$1.3364 to the greenback, or 74.83 U.S. cents,
slightly weaker than Tuesday's close of C$1.3362, or 74.84 U.S.
    The currency's strongest level of the session was C$1.3349,
while it touched its weakest since March 9 at C$1.3406.    
    Foreign investors resumed buying Canadian securities in
January with a big push into corporate and government debt,
while Canadians sold off their positions in foreign equities,
data from Statistics Canada showed. 
    Canadian government bond prices were mixed across the
maturity curve, with the two-year price down 1
Canadian cent to yield 0.578 percent and the benchmark 10-year
 falling 6 Canadian cents to yield 1.336 percent.
    The 10-year yield last week posted a two-month high at 1.382
    The Canada-U.S. two-year bond spread was 2.1 basis points
more negative at -41.5 basis points, its most negative since
Jan. 27, as U.S. Treasuries underperformed.

 (Reporting by Fergal Smith; Editing by Nick Zieminski)