CANADA FX DEBT-Loonie weakens as investors favor safe-haven currencies

    * Canadian dollar falls 0.2% against the greenback
    * Price of U.S. oil increases 0.7%
    * Canada's 10-year yield hits a nearly two-month low at

    TORONTO, May 28 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Tuesday as the greenback broadly
climbed, but the loonie stayed within its recent range ahead of
a Bank of Canada interest rate decision on Wednesday.    
    The U.S. dollar        rose against a basket of major
currencies as trade tensions encouraged investors to buy
safe-haven currencies and as political risks in Europe weighed
on the euro.             
    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 trade.
    The price of oil increased on Tuesday as tighter global
supplies helped to offset persistent worries that demand will be
hurt by the continuing U.S.-Chinese trade conflict. U.S. crude
       prices were up 0.7% at $59.06 a barrel.             
    At 8:43 a.m. (1243 GMT), the Canadian dollar          was
trading 0.2% lower at 1.3467 to the greenback, or 74.26 U.S.
cents. The currency, which has spent much of the last month
between 1.34 and 1.35, traded in a range of 1.3434 to 1.3479.
    The Bank of Canada is widely expected to leave its benchmark
interest rate unchanged on Wednesday at 1.75% as it weighs
developments in household spending, oil markets and global trade
    The central bank, which has kept the rate on hold since
October after having tightened by 125 basis points since July
2017, has projected that the economy barely grew in the first
three months of the year. Canada's first quarter gross domestic
product data is due on Friday.
    Canadian government bond prices were higher across a flatter
yield curve, with the two-year            up 1.5 Canadian cents
to yield 1.54% and the 10-year             rising 15 Canadian
cents to yield 1.584%.
    The 10-year yield touched its lowest intraday since March 29
at 1.571%.

 (Reporting by Fergal Smith
Editing by Nick Zieminski)