CANADA FX DEBT-Loonie hits six-day low as underlying inflation cools

    * Loonie touches its weakest since May 9 at 1.3493
    * Canada's annual inflation rate edges up to 2.0% in April
    * Price of U.S. oil decreases 0.7%
    * Canada' 10-year yield hits lowest since April 1 at 1.633%

    TORONTO, May 15 (Reuters) - The Canadian dollar weakened to
a nearly one-week low against its U.S. counterpart on Wednesday
as stocks and oil prices fell and as domestic data showed
evidence of lower underlying inflation.
     Canada's annual inflation rate edged up to 2.0% in April
from 1.9% in March, driven in part by a carbon levy that pushed
up gasoline prices in six provinces, Statistics Canada data
showed. But two of the Bank of Canada's three measures of core
inflation fell.             
    Chances that the central bank would cut interest rates by
year end were slightly higher at more than 40% after the report,
the overnight index swaps market indicated.           
    Global stocks          fell as a surprise drop in U.S.
retail sales and underwhelming data from China raised growth
concerns, while investors waited for more developments in the
U.S.-China trade dispute.             
    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 declined after data showed a surprise rise in
U.S. crude inventories and the U.S.-Chinese trade dispute
threatened demand, although Middle East tensions capped losses.
U.S. crude oil futures        were down 0.7% at $61.32 a barrel.
    At 9:38 a.m. EDT (1338 GMT), the Canadian dollar         
was trading 0.1% lower at 1.3477 to the greenback, or 74.20 U.S.
cents. The currency touched its weakest intraday since May 9 at
    Canadian home sales rose 3.6 percent in April from the
previous month, adding to the sector's recovery after sales in
February hit the lowest since 2012, the Canadian Real Estate
Association said.             
    Canadian government bond prices were higher across the yield
curve in sympathy with U.S. Treasuries. The two-year           
rose 8.5 Canadian cents to yield 1.560% and the benchmark
10-year             climbed 53 Canadian cents to yield 1.636%.
    The 10-year yield touched its lowest intraday since April 1
at 1.633%.     

 (Reporting by Fergal Smith; editing by Jonathan Oatis)