CANADA FX DEBT-C$ dips vs weaker greenback as rate hike boost fades

(Adds analyst quotes and additional information throughout; updates prices)

* Canadian dollar at C$1.2184, or 82.07 U.S. cents

* Bond prices lower across the yield curve

* Canada-U.S. 10-year spread narrows by 2.8 basis points

TORONTO, Sept 15 (Reuters) - The Canadian dollar lost ground on Friday against a weaker U.S. dollar, as the boost from last week's interest rate hike by the Bank of Canada showed some signs of fading.

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

trading at C$1.2184 to the greenback, or 82.07 U.S. cents, down 0.2 percent. It traded in a range of C$1.2120 to C$1.2219. For the week, the loonie also dipped 0.2 percent. It rose 1.9 percent the previous week after the Bank of Canada raised rates for the second time in two months and left the door open to further increases. "We really haven't seen much follow through this week," said Amo Sahota, director at Klarity FX. "Everyone has priced in the rate hikes now." Data from the overnight index swaps market showed that another hike has been nearly fully discounted by December.

Speculators have mostly held onto bullish bets on the loonie, data from the U.S. Commodity Futures Trading Commission and Reuters calculations showed. Canadian dollar net long positions dipped to 50,499 contracts as of Sept. 12 from 53,644 contracts a week earlier. The bullish positioning indicates that investors have bought into the Bank of Canada's hawkish message, Sahota said. Canadian household debt as a share of income hit a record in the second quarter. The Bank of Canada has been concerned that highly indebted Canadians have less flexibility to deal with sudden changes in their income. Separate data showed Canadian home resales bounced back in August after four straight monthly declines, suggesting the cooling market may be stabilizing.

The U.S. dollar retreated against a basket of major

currencies, after data showing an unexpected decline in U.S. retail sales last month dimmed expectations for an interest rate increase by the Federal Reserve in December.

U.S. crude prices, which have climbed this week on

higher demand forecasts and the restart of refineries in the United States following recent storms, settled flat at $49.89 a barrel. Oil is one of Canada's major exports. Canadian government bond prices were lower across the yield

curve, with the 10-year falling 25 Canadian cents to

yield 2.088 percent. The gap between the 10-year yield and its U.S. counterpart narrowed by 2.8 basis points to a spread of -11.3 basis points. Last Friday, the spread hit its narrowest since October 2013 at -7.8 basis points.

(Reporting by Fergal Smith; Editing by Bernadette Baum and Diane Craft)