CORRECTED-CANADA FX DEBT-C$ weakens as U.S-China trade dispute intensifies

 (Corrects rate in sixth paragraph to 1.3381 not 1.3481)
    * Canadian dollar falls 0.2% against the greenback
    * Price of U.S. oil rises 1.7%
    * Canadian bond prices rise across a flatter yield curve

    TORONTO, May 13 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Monday as investors worried
about the damage to the global economy of an escalating trade
dispute between the United States and China.
    Global stocks          added to last week's losses as U.S.
President Donald Trump warned Beijing not to retaliate in a
trade dispute after China said it "will never surrender to
external pressure."             
    Canada runs a current account deficit and exports many
commodities, including oil, so its economy could be hurt by a
slowdown in the global flow of capital or trade.
    Oil prices rose as increasing concerns about supply
disruptions in the Middle East offset worries over global
economic growth prospects. U.S. crude oil futures        were up
1.7% at $62.73 a barrel.             
    At 8:59 a.m. (1259 GMT), the Canadian dollar          was
trading 0.2% lower at 1.3434 to the greenback, or 74.44 U.S.
cents. The currency traded in a range of 1.3420 to 1.3453.
    On Friday, the loonie touched a nine-day high at 1.3381
after data showing a record jobs gain.             
    Speculators have cut their bearish bets on the Canadian
dollar for the third straight week, data from the U.S. Commodity
Futures Trading Commission and Reuters calculations showed. As
of May 7, net short positions had fallen to 46,115 contracts
from 46,745 in the prior week.
    Canadian government bond prices were higher across a flatter
yield curve in sympathy with U.S. Treasuries, with the two-year
           up 5.5 Canadian cents to yield 1.612% and the 10-year
            rising 39 Canadian cents to yield 1.691%.
    The gap between the yields on the 10-year bond and the
3-month T-bill narrowed by 4.2 basis point to a spread of 1.6
basis points in favor of the longer-dated maturity, close to
    Canada's inflation report for April is due on Wednesday.

 (Reporting by Fergal Smith
Editing by Nick Zieminski)