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CANADA FX DEBT-C$ near 5-month high as oil prices climb

* Canadian dollar at C$1.3032, or 76.73 U.S. cents

* Loonie touches its strongest since Feb. 3 at C$1.3006

* Bond prices lower across a steeper yield curve

* 10-year yield touches 3-month high at 1.714 percent

TORONTO, June 29 (Reuters) - The Canadian dollar edged up to a nearly 5-month high against its U.S. counterpart on Thursday as oil prices rose, while investors braced for an interest rate hike from the Bank of Canada as soon as next month. Gains for the loonie came after it scored on Wednesday its biggest advance in three months, boosted by hawkish comments from Bank of Canada Governor Stephen Poloz. Chances of a rate hike next month have increased to 44 percent from just 20 percent after subdued inflation data on Friday, data from the overnight index swaps market shows.

rate hike and is about one-third priced for a second tightening. Prices of oil, one of Canada's major exports, rose to a two-week high, after a decline in weekly U.S. production eased concerns about deepening oversupply.

U.S. crude prices were up 0.78 percent at $45.09 a

barrel.

At 9:23 a.m. ET (1323 GMT), the Canadian dollar was

trading at C$1.3032 to the greenback, or 76.73 U.S. cents, up 0.1 percent. The currency's weakest level of the session was C$1.3044, while it touched its strongest since Feb. 3 at C$1.3006. The total number of non-farm payroll employees rose by 4,800 in April from March, data from Statistics Canada showed. Canada's gross domestic product data for April and the Bank of Canada's business outlook report are due on Friday. Canadian government bond prices lower across a steeper yield curve in sympathy with U.S. Treasuries and German Bunds, pressured by the view that global central banks are becoming less accommodative.

The two-year fell 6.5 Canadian cents to yield 1.083 percent and the 10-year declined 67 Canadian

cents to yield 1.700 percent. The 10-year yield touched its highest intraday since March 21 at 1.714 percent, while the gap between it and its U.S. equivalent narrowed by 1.5 basis points to a spread of -58.4 basis points, its narrowest since Oct. 20, as Canadian government bonds underperformed.

(Reporting by Fergal Smith; Editing by Nick Zieminski)