CANADA FX DEBT-C$ claws back losses after finding technical support

 (Adds analyst quotes, details throughout; updates prices)
    * Canadian dollar at C$1.2521, or 79.87 U.S. cents
    * Loonie touches its highest since Oct. 6 at C$1.2591
    * Bond prices higher across yield curve
    * Canada's 2-year yield further below U.S. counterpart

    By Fergal Smith
    TORONTO, Oct 17 (Reuters) - The Canadian dollar clawed back
its losses against the greenback on Tuesday, helped by technical
buying, after NAFTA uncertainty had pressured the loonie to its
lowest in more than a week.
    At 5 p.m. EDT (2100 GMT), the Canadian dollar          was
little changed at C$1.2521 to the greenback, or 79.87 U.S.
    The currency traded in a relatively broad range, with its
strongest level of the session was C$1.2514, while it touched
its weakest since Oct. 6 at C$1.2591.
    "It bounced pretty well" after finding support ahead of its
October low at C$1.2600, said Adam Button, currency analyst at
    "Expectations are very low for any kind of NAFTA
breakthrough ... the market is expecting someone to walk away
from the table before there is any progress."
    Trade ministers from the United States, Canada and Mexico
wrapped up a contentious round of negotiations on the North
American Free Trade Agreement dominated by aggressive demands
from Washington, including a sunset clause on the pact that
Canadian and Mexican officials say will be rejected.
    Canada sends about 75 percent of its exports to the United
States and its economy could be hurt if a deal to renew NAFTA is
not reached.
    In addition, tougher new rules on mortgage lending finalized
by Canada's banking regulator could add to the slowdown in
Canada's previously red-hot housing market.             
    Still, analysts in a Reuters poll expect the Bank of Canada
to hike interest rates for a third time by year-end.
    Canadian government bond prices were higher across the yield
curve, with the two-year            up 3 Canadian cents to yield
1.512 percent and the 10-year             rising 12 Canadian
cents to yield 2.016 percent.
    The gap between the 2-year yield and its U.S. equivalent,
which dropped below parity on Monday for the first time in six
weeks, widened by 2.2 basis points to a spread of -3.8 basis

 (Reporting by Fergal Smith, editing by G Crosse)