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CANADA FX DEBT-C$ slips from 5-week high as oil falls, greenback rallies

(Adds dealer quotes and details throughout; updates prices)

* Canadian dollar at C$1.2702, or 78.73 U.S. cents

* Loonie touches its strongest since Oct. 25 at C$1.2656

* Bond prices lower across a flatter yield curve

TORONTO, Dec 4 (Reuters) - The Canadian dollar retreated on Monday from an earlier five-week high against its broadly firmer U.S. counterpart, as oil fell and investors weighed how Friday's robust jobs data will affect a Bank of Canada interest rate decision this week.

At 4 p.m. EST (2100 GMT), the Canadian dollar was

trading at C$1.2702 to the greenback, or 78.73 U.S. cents, down 0.1 percent. The currency's weakest level of the session was C$1.2726, while it touched its strongest since Oct. 25 at C$1.2656. "The loonie is catching its breath," said Rahim Madhavji, president of Knightsbridge Foreign Exchange. "It had a huge move on Friday." The loonie scored its biggest gain on Friday since March 2016 after data showed the economy added nearly 80,000 jobs in November. "It has people questioning what is going to happen with the Bank of Canada." Madhavji said. Canada's central bank has said it is "data dependent." It is expected to leave its benchmark interest rate steady at 1 percent on Wednesday. But chances of a hike in March have increased to 86 percent from 67 percent before Friday's jobs data.

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

currencies after the U.S. Senate approved a major tax overhaul over the weekend that aims to cut taxes for businesses, while proposing a mixed package of changes for individual Americans.

Prices of oil, one of Canada's major exports, fell on profit-taking as the market eyed signs of rising U.S. production, though prices remained close to recent two-year highs.

U.S. crude prices settled 1.5 percent lower at $57.47

a barrel. Canada will continue to explore a free trade agreement with China, Canadian Prime Minister Justin Trudeau said, as it weighs its options after the United States threatened to pull out of the North American Free Trade Agreement. Canadian government bond prices were lower across a flatter

yield curve, with the two-year down 6 Canadian cents to yield 1.552 percent and the 10-year falling 13

Canadian cents to yield 1.924 percent.

(Reporting by Fergal Smith; Editing by Meredith Mazzilli)