CANADA FX DEBT-C$ weakens to new 7-week low as oil falls

* Canadian dollar at C$1.3240, or 75.53 U.S. cents
    * Loonie touches its weakest since July 27 at C$1.3246
    * Bond prices mixed across the yield curve

    TORONTO, Sept 16 (Reuters) - The Canadian dollar weakened to
set a new seven-week low against its broadly firmer U.S.
counterpart on Friday as oil fell and  domestic manufacturing
sales rose by less than expected.
    Canadian manufacturing sales edged up by 0.1 percent in July
from June, Statistics Canada data indicated, held back by
weakness in the machinery and aerospace sectors. The gain was
well below the 1 percent gain forecast by analysts in a Reuters
    In volume terms, sales climbed by a more robust 0.6 percent.
    The U.S. dollar rose against a basket of major currencies as
U.S. consumer prices increased more than expected in August,
pointing to a steady build-up of inflation that could allow the
Federal Reserve to raise interest rates this year. 
    The probability of a Fed rate hike next week rose to 15
percent from 12 percent on Thursday, according to CME Group's
FedWatch tool.
    In contrast, overnight index swaps imply a 25 percent chance
of a Bank of Canada interest rate cut by mid-2017. The
probability was little changed after the manufacturing data.
    Oil prices fell to multi-week lows as rising Iranian exports
and returning supplies from Libya and Nigeria fueled concerns
that a global glut would persist. U.S. crude prices were
down 2.53 percent at $42.8 a barrel. 
    At 9:29 a.m. EDT (1329 GMT), the Canadian dollar 
was trading at C$1.3240 to the greenback, or 75.53 U.S. cents,
weaker than Thursday's close of C$1.3160, or 75.99 U.S. cents.
    The currency's strongest level of the session was C$1.3143,
while it touched its weakest since July 27 at C$1.3246.
    In separate data, foreign investment in Canadian securities
slowed in July for the fourth straight month, largely because
purchases of stocks collapsed from the 12-year highs seen in
June, Statistics Canada said. 
    Canadian government bond prices were mixed across the yield
curve, with the two-year bond flat to yield 0.576
percent and the benchmark 10-year rising 2 Canadian
cents to yield 1.195 percent.
    Germany's economy minister said on Thursday he expected the
country's Social Democrats, a junior partner in the ruling
coalition,to vote in favor of a free-trade agreement between
Canada and the European Union at a party meeting on Sept. 19.

 (Reporting by Fergal Smith; Editing by Chizu Nomiyama)