CANADA FX DEBT-C$ weakens slightly as oil retreats

* Canadian dollar at C$1.2677, or 78.88 U.S. cents
    * Bond prices lower across maturity curve

    TORONTO, April 21 (Reuters) - The Canadian dollar weakened
slightly against its U.S. counterpart on a pullback in oil
prices on Thursday, one day after notching a fresh nine-month
    Canada's currency has strengthened 16 percent since falling
to a 12-year low in January, helped by the recent rebound in oil
prices and the unraveling of expectations for a Bank of Canada
interest rate cut.    
    The price of U.S. crude was down 0.93 percent to
$43.77 a barrel, still near a five-month high, after the
International Energy Agency (IEA) said non-OPEC production would
fall this year by the most in a generation and help rebalance a
market dogged by oversupply.        
    At 9:26 a.m. EDT (1326 GMT), the Canadian dollar 
was trading at C$1.2677 to the greenback, or 78.88 U.S. cents,
weaker than Wednesday's close of C$1.2650, or 79.05 U.S. cents.
    The currency's strongest level of the session was C$1.2628,
while its weakest was C$1.2681.
    The Canadian dollar weakened against the euro to C$1.4430
after the European Central Bank held interest rates unchanged.
    On Wednesday, Bank of Canada Governor Stephen Poloz said it
could take Canada more than three years to recover from the
shock of low oil prices, citing persistently negative factors in
its resource-rich economy. 
    Canadian government bond prices were lower across the
maturity curve in sympathy with U.S. Treasuries. The two-year
 price fell 1.5 Canadian cents to yield 0.635 percent
and the new benchmark 10-year was down 34 Canadian
cents to yield 1.467 percent.
    The curve steepened, as the spread between the two-year and
10-year yields widened by 2.7 basis points to 83.2 basis points,
indicating underperformance for longer-dated maturities.
    Canadian retail sales data for February and inflation data
for March are scheduled to be released on Friday.

 (Reporting by Fergal Smith; Editing by Paul Simao)