CANADA FX DEBT-C$ falls to 6-week low amid uncertain trade outlook

    * Canadian dollar at C$1.3182, or 75.86 U.S. cents
    * Loonie touches its weakest since July 24 at $1.3185
    * Price of U.S. oil rises 1.8 percent
    * Bond prices mixed across the yield curve

    TORONTO, Sept 4 (Reuters) - The Canadian dollar weakened to
a six-week low against its U.S. counterpart on Tuesday amid an
uncertain outlook for Canada's trading arrangement with the
United States and ahead of an interest rate decision this week
by the Bank of Canada.    
    Canada and the United States ended talks to revamp the North
American Free Trade Agreement (NAFTA) on Friday without reaching
a deal. Canadian officials are due to resume talks with their
U.S. counterparts on Wednesday.
    Canada sends about 75 percent of its exports to the United
States, so its economy could be hurt if a deal is not reached.
    The Bank of Canada has worried that an uncertain trade
outlook will hurt business investment. The central bank is
expected to leave its policy rate unchanged at 1.50 percent on
Wednesday, a Reuters poll showed.             
    At 9:12 a.m. (1312 GMT), the Canadian dollar          was
trading 0.7 percent lower at C$1.3182 to the greenback, or 75.86
U.S. cents. The currency touched its weakest since July 24 at
    The U.S. dollar        strengthened against a basket of
currencies as concerns about a possible escalation in trade
conflict between the United States and China prompted investors
to dump emerging market currencies.             
    The price of oil, one of Canada's major exports, rose
sharply after the evacuation of two Gulf of Mexico oil platforms
in preparation for a hurricane. U.S. crude        prices were up
1.8 percent at $71.04 a barrel.
    Speculators have cut bearish bets on the Canadian dollar,
data from the U.S. Commodity Futures Trading Commission and
Reuters calculations showed on Friday. As of Aug. 29, net short
positions had fallen to 24,789 contracts from 27,021 a week
    Canadian government bond prices were mixed across the yield
curve, with the two-year            up 3.5 Canadian cents to
yield 2.051 percent and the 10-year             falling 1
Canadian cent to yield 2.23 percent.
    Canada's bond market was closed on Monday for the Labour Day

 (Reporting by Fergal Smith
Editing by Susan Thomas)