CANADA FX DEBT-C$ firms as Trump avoids NAFTA threats, oil rises

(Adds strategist quotes, details on market activity, updates prices) Canadian dollar at C$1.2426, or 80.48 U.S. cents

* Sixth round of NAFTA talks under way in Montreal

* Bond prices mixed across the yield curve

TORONTO, Jan 23 (Reuters) - The Canadian dollar edged higher against its U.S. counterpart on Tuesday after U.S. President Donald Trump said talks to renegotiate NAFTA were going well and as oil prices rose.

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

trading 0.1 percent higher at C$1.2426 to the greenback, or 80.48 U.S. cents. The currency traded in a range of C$1.2422 to C$1.2490. "Oil has returned as a driver, it has helped push USD-CAD lower in today's session," said Greg Anderson, global head of foreign exchange strategy in New York. "We also got a nice little move on the Trump headlines." Trump previously threatened to withdraw from the North American Free Trade Agreement, which could hurt Canada's economy. The country sends 75 percent of its goods exports to the United States. It has helped the Canadian dollar that Trump was not issuing more threats, Anderson said. The sixth and penultimate round of talks on renegotiating NAFTA among Canada, the United States and Mexico opened in Montreal on Tuesday. Trump, who has blamed NAFTA for the loss of U.S. jobs, told reporters the talks were going "pretty well."

Canada has responded to the lack of clarity over the future of the 1994 agreement by attempting to diversify its trade. Earlier on Tuesday, it and 10 other nations agreed to sign a reworked Asia-Pacific trade pact. The price of oil, one of Canada's major exports, was lifted and their allies.

U.S. crude prices settled 1.4 percent higher at

$64.47 a barrel.

The U.S. dollar extended recent weakness against a

basket of major currencies to hit a three-year low. Canadian government bond prices were mixed across the yield

curve, with the two-year flat to yield 1.803 percent and the 10-year rising 5 Canadian cents to yield

2.233 percent. On Monday, the 10-year yield touched its highest intraday in more than three years at 2.249 percent. Canadian retail sales data for November is due on Thursday and the December inflation report is due on Friday.

(Reporting by Fergal Smith; Editing by Bernadette Baum and Peter Cooney)