* C$ covers narrow range, ends at 86.45 U.S. cents
* Fails to benefit from 3 pct rise in oil prices
* Bonds mixed in lackluster trade
* Eye on Canadian GDP for April on Tuesday (Adds details)
TORONTO, June 29 (Reuters) - The Canadian dollar drifted lower against the U.S. dollar on Monday in a quiet rangebound session, unable to benefit from a rally in oil prices.
The currency moved in a narrow range between C$1.1509 and C$1.1601, reflecting a lack of data and reduced trades in a week that is punctuated by two market holidays.
The Canadian dollar finished at C$1.1567 to the U.S. dollar, or 86.45 U.S. cents, down from C$1.1542 to the U.S. dollar, or 86.64 U.S. cents at Friday's close.
Not even a 3 percent jump in oil prices to above $71 a barrel, [ID:nN29393310] could spark activity in the currency. Oil, a key Canadian export, often influences the direction of the currency.
"It's a little bit odd perhaps that we've seen such a big pickup in oil prices and no reaction from the Canadian dollar," said Shaun Osborne, chief currency strategist at TD Securities.
Osborne said he expected oil to rise further, likely past its 2009 high above $73 a barrel, which would then be hard for the Canadian dollar to ignore.
The currency may continue to stay rangebound until the biggest data point of the week for the June U.S. non-farm payrolls data. ECON
Canadian GDP data, due on Tuesday, is expected to show a ninth straight month of economic contraction with a 0.1 percent fall in April after a 0.3 percent decline in March. TD sees a 0.1 percent rise on the month.
"We're expecting something positive for the Canadian dollar to come from the GDP numbers. I think even if we miss slightly on the positive ... I think even unchanged will be quite a result for the Canadian dollar, given the string of weak numbers that we've had on the GDP front."
At the moment, the Canadian dollar is looking a little bit "stretched" after retreating most of this month after a making a three-month run to nearly 93 U.S. cents, he added.
"To my mind, it looks like a correction to the underlying trend," Osborne said.
BONDS LITTLE CHANGED
Short-term bond prices were slightly lower as equity markets moved higher, while longer-dated issues were up a touch, but activity seemed to lack conviction.
Trading was expected to be lackluster all this week due to holidays on both sides of the border with Canada Day on Wednesday and U.S. Independence Day observed on Friday.
The benchmark two-year government bond slipped 1 Canadian cent to C$100.09 to yield 1.202 percent, while the 10-year bond rose 7 Canadian cents to C$103 to yield 3.391 percent.
The 30-year bond was up 10 Canadian cents at C$118.80 to yield 3.882 percent. The comparable U.S. issue yielded 4.287 percent.
Canadian bonds underperformed U.S. treasuries across most of the curve. The Canadian 30-year bond was 40.5 basis points below the U.S. 30-year yield, little changed from 43.7 basis points on Friday. (Reporting by Ka Yan Ng; editing by Rob Wilson)