CANADA FX DEBT-C$ slips as oil prices fall, U.S. mulls auto tariffs

    * Canadian dollar at C$1.2880, or 77.64 U.S. cents
    * The price of oil falls 1.4 percent
    * Bond prices higher across the yield curve

    TORONTO, May 24 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Thursday as oil prices fell and
investors weighed the potential  imposition of U.S. tariffs on
car imports.
    The Trump administration has launched a national security
investigation into car and truck imports that could lead to new
U.S. tariffs, similar to those imposed on imported steel and
aluminum in March.             
    The investigation comes as the United States renegotiates
the North American Free Trade Agreement with Canada and Mexico
to return more auto production to the United States.
    Canada is a major exporter of autos to the United States so
its economy could be hurt by U.S. auto tariffs or failure to
reach a deal on NAFTA.
    Oil is also one of Canada's major exports. Its price fell by
the most in two weeks as expectations rose that OPEC will end an
output deal that has been in place since the start of 2017.
    U.S. crude        prices were down 1.4 percent at $70.84 a
    At 9:08 a.m. EDT (1308 GMT), the Canadian dollar         
was trading 0.3 percent lower at C$1.2880 to the greenback, or
77.64 U.S. cents.
    The currency traded in a range of C$1.2829 to C$1.2898. On
Wednesday, it touched its weakest in more than one week at
    The Bank of Canada will probably hold interest rates steady
on May 30 as uncertain trade policy and indebted consumers
necessitate caution, but firmer price and wage inflation will
prompt two increases in the second half of 2018, a Reuters poll
    Canadian government bond prices were higher across the yield
curve in sympathy with U.S. Treasuries. The two-year           
rose 2 Canadian cents to yield 2.016 percent and the 10-year
            gained 7 Canadian cents to yield 2.436 percent. 

 (Reporting by Fergal Smith
Editing by Nick Zieminski)