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CANADA FX DEBT-C$ slides as oil prices fall, CPI and NAFTA in focus

* Canadian dollar at C$1.2726, or 78.58 U.S. cents

* Bond prices lower across steeper yield curve

TORONTO, Aug 14 (Reuters) - The Canadian dollar softened on Monday against a stronger greenback as the U.S. dollar's rebound and demand worries from China pressured crude prices. Prices of oil, a major Canadian export, fell sharply as a slowdown in Chinese refining raised concerns about demand for crude in Asia's largest economy.

U.S. crude prices settled down 2.5 percent at $47.59

a barrel.

The U.S. dollar rose broadly as traders unwound

bearish bets against the greenback following last week's escalation of tensions between the United States and North Korea as well as underwhelming economic data. Risk-sensitive assets, such as stocks, rallied as U.S. officials played down the risk of an imminent war.

At 4 p.m. EDT (2000 GMT), the Canadian dollar was

trading at C$1.2726 to the greenback, or 78.58 U.S. cents, down 0.4 percent. On Friday, the loonie touched its weakest level in four weeks at C$1.2753 before recouping losses. The currency traded on Monday in a range between C$1.2675 and C$1.2731. Canada's dollar "has seen its best levels of 2017," said Brad Schruder, director of corporate sales and structuring at BMO Capital Markets. "I think should you see this move down into the C$1.26s, that buyers of USD/CAD would be guided to scoop some accordingly." For the week ahead, investors are awaiting Canada's inflation data for July on Friday to see whether the numbers will support a potential second rate hike from the Bank of Canada later this year. Negotiations for modernizing the North American Free Trade Agreement (NAFTA) start on Wednesday. The Canadian government's goals in the talks include preserving NAFTA's dispute-settlement mechanism, Foreign Minister Chrystia Freeland said, setting up a potential clash with Washington. Canadian government bond prices were lower across the

maturity curve, with the two-year price down 3

Canadian cents to yield 1.227 percent and the benchmark 10-year falling 23 Canadian cents to yield 1.879 percent.

(Reporting by Solarina Ho, additional reporting by Fergal Smith, editing by G Crosse)