* Canadian dollar near flat against the greenback * Price of U.S. oil increases 1.8% * Canadian factory sales fall by 0.6% in April * Canadian bond prices rise across flatter yield curve TORONTO, June 18 (Reuters) - The Canadian dollar was little changed on Tuesday, paring earlier losses after slipping to a two-week low against the greenback, as a rally in oil prices offset domestic data showing an unexpected drop in April manufacturing sales. Canadian factory sales fell by 0.6% in April from March as motor vehicle sales were held back by temporary assembly plant shutdowns, Statistics Canada said. Analysts had forecast a 0.4% increase. The price of oil, one of Canada's major exports, rose as Middle East tensions offset signs that global economic growth is being hurt by the trade dispute between the United States and China. U.S. crude oil futures were up 1.8% at $52.85 a barrel. Canada and China have also had trade frictions, including the blocking by China of Canadian canola seed imports. On Tuesday, China's customs agency said it would block pork imports from a Canadian company after a batch of the firm's pork was found to contain the banned feed additive ractopamine. At 9:40 a.m. (1340 GMT), the Canadian dollar was trading nearly unchanged at 1.3406 to the greenback, or 74.59 U.S. cents. The currency traded in a narrow range of 1.3402 to 1.3433. Still, 1.3433 was its weakest intraday level since June 4. The U.S. dollar rose against a basket of major currencies after ECB chief Mario Draghi said the bank will provide more monetary stimulus if inflation doesn't pick up, pressuring the euro. Meanwhile, the U.S. Federal Reserve is expected to leave borrowing costs unchanged at an interest rate decision on Wednesday but possibly lay the groundwork for a rate cut later this year. Canadian government bond prices were higher across the yield curve, with the two-year up 4 Canadian cents to yield 1.379% and the 10-year rising 43 Canadian cents to yield 1.409%. The 10-year yield hit its lowest intraday since June 2017 at 1.383%, while the gap between the 2- and 10-year yields narrowed by 2.3 basis points to a spread of 3 basis points. Canada's inflation report for May is due on Friday. (Reporting by Fergal Smith; Editing by Bernadette Baum)
Our Standards: The Thomson Reuters Trust Principles.