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CANADA FX DEBT-Canadian dollar slips from 3-week high as investors demand greenbacks

 (Adds strategist quotes and details throughout; updates prices)
    * Canadian dollar falls 0.3% against the greenback
    * Canada payroll employment rises 25,900 in January
    * Price of U.S. oil increases 0.9%
    * Canadian bond yields fall across a flatter yield curve

    By Fergal Smith
    TORONTO, Feb 20 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Thursday as evidence of the
coronavirus spreading outside of China bolstered demand for the
greenback, with the loonie retreating from a near three-week
high it hit earlier in the day.
    At 4:26 p.m. (2126 GMT), the Canadian dollar          was
trading 0.3% lower at 1.3257 to the greenback, or 75.43 U.S.
cents. The currency's weakest level of the session was 1.3270,
while it touched its strongest since Jan. 31 at 1.3212.
    "For me, it is not really a story about the Canadian dollar,
it is more about (U.S.) dollar strength again," said Christian
Lawrence, senior market strategist at Rabobank. "I think this
theme continues. ... the bottom line is people just still want
dollars." 
    The greenback        rallied against a basket of major
currencies and stocks fell globally          as South Korea
reported a spike in new cases and Japan reported two new deaths,
while research suggested the virus spreads faster than
previously thought.             
    The price of oil, one of Canada's major exports, rose after
the U.S. government reported a much smaller-than-anticipated
rise in crude stocks, but gains were capped by worries about the
spread of coronavirus outside China. U.S. crude oil futures
       settled 0.9% higher at $53.78 a barrel.             
    Canada added 25,900 jobs in January, led by hiring in the
trade, transportation and utilities and construction sectors,
according to a report from payroll services provider ADP.
            
    Separate data showed that the Teranet-National Bank
Composite House Price Index rose 0.1% in January, paced by gains
for the Eastern Canadian metropolitan areas of Hamilton,
Ontario, and Montreal.              
    The decline for the loonie came as a blockade of Canada's
rail lines dragged on and the economic impact deepened. For the
past two weeks, campaigners have blocked rail lines in Ontario,
Quebec and Alberta in solidarity with a British Columbia
aboriginal band that had stopped construction of a gas pipeline
over its land.                      
    Canadian bond yields fell across a flatter yield curve in
sympathy with U.S. Treasuries. The 10-year yield was down 5.3
basis points at 1.306%.
    Canada's retail sales report for December is due on Friday,
which could help guide expectations for the Bank of Canada
interest rate outlook. Money markets see about a 45% chance that
the central bank will ease by April.            

 (Reporting by Fergal Smith; Editing by Jonathan Oatis and Peter
Cooney)
  
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