CANADA FX DEBT-C$ weakens on uncertainty over NAFTA

* Canadian dollar at C$1.2539, or 79.75 U.S. cents

* Bond prices lower across the yield curve

* Canada-U.S. 5-year spread touches its widest in nearly 2 months

TORONTO, Oct 17 (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Tuesday as worries about the future of NAFTA offset firm oil prices. Renegotiation of the North American Free Trade Agreement has been marked by aggressive U.S. demands that have left the future of the 23-year-old free trade pact in doubt. Canada sends about 75 percent of its exports to the United States. U.S. Trade Representative Robert Lighthizer, Mexican Economy Minister Ildefonso Guajardo and Canadian Foreign Minister Chrystia Freeland are scheduled to meet and take stock of the negotiations before issuing statements at a joint event at 3 p.m. (1900 GMT). Prices of oil, one of Canada's major exports, were steady as fighting between Iraqi and Kurdish forces threatened supplies from northern Iraq.

U.S. crude prices were up 0.08 percent at $51.91 a


At 9:14 a.m. ET (1314 GMT), the Canadian dollar was

trading at C$1.2539 to the greenback, or 79.75 U.S. cents, down 0.2 percent. The currency traded in a range of C$1.2514 to C$1.2554. On Monday, the loonie touched a one-week low at C$1.2558. It has also been pressured recently by reduced expectations for another Bank of Canada interest rate hike over the coming months. Chances of a rate hike at next week's rate decision have fallen to around 20 percent from nearly 50 percent in mid-September, the overnight index swaps market shows.

Bank of Canada Senior Deputy Governor Carolyn Wilkins will participate in a panel discussion on blockchain at 3:30 p.m. ET (1930 GMT). Canadian government bond prices edged lower across the yield curve in sympathy with U.S. Treasuries. The two-year fell 2 Canadian cents to yield 1.537 percent and the 10-year slipped 3 Canadian cents to yield 2.034 percent. The gap between the 5-year yield and its U.S. equivalent widened by 1.3 basis points to a spread of -24.9 basis points, its widest since Aug. 21.

(Reporting by Fergal Smith; Editing by Susan Thomas)