CANADA FX DEBT-C$ firms to nearly eight-week high as oil rallies

(Adds analyst quotes, background on recent data; updates
    * Canadian dollar at C$1.2771, or 78.30 U.S. cents
    * Loonie touches its strongest level since June 24 at
    * Bond prices mixed across flatter maturity curve

    By Fergal Smith
    TORONTO, Aug 18 (Reuters) - The commodity-linked Canadian
dollar strengthened to a near eight-week high against its U.S.
counterpart on Thursday as oil surged and minutes from the
Federal Reserve's July meeting weighed on the greenback.
    Oil prices were higher for a sixth straight day as the
world's biggest producers prepared to discuss a possible freeze
in production levels. U.S. crude prices settled up $1.43
at $48.22 a barrel. 
    "The main story of the whole month has been the price of oil
... that has been the driving force behind the appreciation in
the loonie against the U.S. dollar for the month of August,"
said Darren Richardson, senior corporate dealer at
    The U.S. dollar fell against a basket of major currencies
 after the Fed minutes, released on Wednesday, showed a
bias among policymakers against raising U.S. interest rates
    "I think markets were hoping to see a bit more of a hawkish
comment especially after the impressive employment figures at
the beginning of the month," Richardson said.
    Data on Aug. 5 showed a robust U.S. jobs gain for July which
contrasted with a slump in domestic jobs for the same month and
a record-wide Canadian trade deficit in June. 
    The Canadian dollar was trading at C$1.2771 to the
greenback, or 78.30 U.S. cents, stronger than Wednesday's close
of C$1.2856, or 77.78 U.S. cents.
    The currency's weakest level was C$1.2857, while it touched
its strongest level since June 24 at C$1.2765.
    Foreign investors bought a net C$9.02 billion ($7.03
billion) in Canadian securities in June, mainly in stocks, after
buying C$13.99 billion in securities in May. 
    Canadian government bond prices were mixed across the
maturity curve, with the two-year bond down 0.5
Canadian cent to yield 0.575 percent and the benchmark 10-year
 rising 12 Canadian cents to yield 1.041 percent.
    The curve flattened as the spread between the 2-year and
10-year yields narrowed by 1.6 basis points to 46.6 basis
points, its narrowest since June 2008.
    Canadian retail sales data for June and inflation data for
July are awaited on Friday. 

 (Reporting by Fergal Smith, editing by G Crosse)