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CANADA FX DEBT-C$ retreats from near 1-week high as oil falls

* Canadian dollar at C$1.2481, or 80.12 U.S. cents

* Bond prices rise across the yield curve

* 10-year yield touches 5-week low at 1.991 percent

TORONTO, Oct 19 (Reuters) - The Canadian dollar edged lower against its U.S. counterpart on Thursday, retreating from a near one-week high earlier in the day, as oil prices fell and the rally in global stocks paused. Prices of oil, one of Canada's major exports, slipped on profit taking. Oil had been supported in recent weeks by OPEC-led supply cuts, tension in the Middle East and lower U.S. production.

U.S. crude prices were down 1.48 percent at $51.27 a

barrel. World stocks retreated from all-time highs as traders marked 30 years to the day since the 1987 Black Monday stock market crash. Canada's commodity linked-currency tends benefit from high risk appetite.

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

trading at C$1.2481 to the greenback, or 80.12 U.S. cents, down 0.1 percent. The currency touched its strongest intraday since Friday at C$1.2451. It had found support earlier this week ahead of its October low at C$1.2600. Still, an uncertain outlook for the North American Free Trade Agreement remains a headwind for the loonie and growth in the economy is expected to slow after rapid expansion in the first half of the year. The release on Friday of the September inflation report and August retail sales data will provide clues on prospects for the economy, ahead of an interest rate decision next week from the Bank of Canada. Chances of a hike next week have fallen to 15 percent from nearly 50 percent in mid-September, the overnight index swaps market indicates. Canadian government bond prices were higher across the yield curve in sympathy with U.S. Treasuries. The two-year rose 6.2 Canadian cents to yield 1.482 percent and the 10-year climbed 16 Canadian cents to yield 1.997 percent. The 10-year yield touched its lowest since Sept. 11 at 1.991 percent.

(Reporting by Fergal Smith; Editing by Meredith Mazzilli)