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CANADA FX DEBT-C$ dips with oil as investors weigh trade talks

* Canadian dollar at C$1.2917, or 77.42 U.S. cents

* Oil prices fall 0.6 percent

* Bond prices lower across the yield curve

TORONTO, March 26 (Reuters) - The Canadian dollar edged lower against its U.S. counterpart on Monday as oil prices dipped, with the loonie unable to build on last week's gains even as fear of a global trade war lessened. Global stocks came off six-week lows on optimism that the United States and China are set to begin trade talks. Canada's commodity-linked economy could be hurt if global trade slowed.

The price of oil, one of Canada's major exports, pulled back

from an earlier two-month high. U.S. crude prices, which

had been supported by escalating Saudi-Iran tensions, were down 0.6 percent at $65.5 a barrel. At 9:26 a.m. EST (1326 GMT), the Canadian dollar was trading 0.2 percent lower at C$1.2917 to the greenback, or 77.42 U.S. cents. The currency traded in a range of C$1.2841 to C$1.2922. On Friday, the currency touched its strongest since March 12 at C$1.2824 after hotter-than-expected domestic inflation data raised prospects of a further Bank of Canada interest rate hike as soon as next month. The loonie has also benefited recently from optimism about a deal to revamp the North American Free Trade Agreement. It rose 1.6 percent last week. Speculators have raised bullish bets on the Canadian dollar for the first time in six weeks, data from the U.S. Commodity Futures Trading Commission and Reuters calculations showed on Friday. As of March 20, net long positions had increased to 24,560 contracts from 19,420 a week earlier. Canadian government bond prices were lower across the yield

curve, with the two-year down 3 Canadian cents to yield 1.869 percent and the 10-year falling 11

Canadian cents to yield 2.207 percent. Canada's gross domestic product data for January is due on Thursday.

(Reporting by Fergal Smith Editing by Susan Thomas)