CANADA FX DEBT-C$ retreats from near 1-week high as oil falls

    * Canadian dollar at C$1.2481, or 80.12 U.S. cents
    * Bond prices rise across the yield curve
    * 10-year yield touches 5-week low at 1.991 percent

    TORONTO, Oct 19 (Reuters) - The Canadian dollar edged lower
against its U.S. counterpart on Thursday, retreating from a near
one-week high earlier in the day, as oil prices fell and the
rally in global stocks paused.
    Prices of oil, one of Canada's major exports, slipped on
profit taking. Oil had been supported in recent weeks by
OPEC-led supply cuts, tension in the Middle East and lower U.S.
    U.S. crude        prices were down 1.48 percent at $51.27 a
    World stocks retreated from all-time highs as traders marked
30 years to the day since the 1987 Black Monday stock market
    Canada's commodity linked-currency tends benefit from high
risk appetite.
    At 9:23 a.m. ET (1323 GMT), the Canadian dollar          was
trading at C$1.2481 to the greenback, or 80.12 U.S. cents, down
0.1 percent.
    The currency touched its strongest intraday since Friday at
C$1.2451. It had found support earlier this week ahead of its
October low at C$1.2600.
    Still, an uncertain outlook for the North American Free
Trade Agreement remains a headwind for the loonie and growth in
the economy is expected to slow after rapid expansion in the
first half of the year.
    The release on Friday of the September inflation report and
August retail sales data will provide clues on prospects for the
economy, ahead of an interest rate decision next week from the
Bank of Canada.
    Chances of a hike next week have fallen to 15 percent from
nearly 50 percent in mid-September, the overnight index swaps
market indicates.           
    Canadian government bond prices were higher across the yield
curve in sympathy with U.S. Treasuries. The two-year           
rose 6.2 Canadian cents to yield 1.482 percent and the 10-year
            climbed 16 Canadian cents to yield 1.997 percent.
    The 10-year yield touched its lowest since Sept. 11 at 1.991

 (Reporting by Fergal Smith; Editing by Meredith Mazzilli)