CANADA FX DEBT-C$ dips as higher bond yields stress global growth prospects

* Canadian dollar dips 0.1 percent against the greenback

* Price of U.S. oil falls 0.6 percent

* Canadian building permit values rise 0.4 percent in August

* Bond prices fall across a steeper yield curve

TORONTO, Oct 10 (Reuters) - The Canadian dollar edged lower against its U.S. counterpart on Wednesday as oil prices fell and U.S. Treasury yields climbed toward multiyear peaks. Investors were worried that higher bond yields and trade conflicts could hurt global economic growth. On Tuesday, the International Monetary Fund cut its world gross domestic product forecasts for the first time in two years. Canada's economy could suffer if global growth slows, since it exports many commodities, including oil. The price of oil dropped, even as Hurricane Michael forced the shutdown of nearly 40 percent of U.S. Gulf of Mexico oil output and U.S. sanctions restricted Iranian exports.

U.S. crude prices dipped 0.6 percent at $74.55 a

barrel. At 9:41 a.m. (1341 GMT), the Canadian dollar traded 0.1 percent lower at 1.2966 to the greenback, or 77.12 U.S. cents. The currency traded in a range of 1.2927 to 1.2975.

The loonie has retreated 1.4 percent since notching its strongest in more than four months last week at 1.2783 as a deal to revamp the North American Free Trade Agreement reduced uncertainty for Canada's economy. The value of Canadian building permits increased by 0.4 percent in August from July after a downwardly revised 1.5 percent drop in the prior month, Statistics Canada said.

Canadian government bond prices were lower across a steeper yield curve in sympathy with U.S. Treasuries. The 10-year declined 32 Canadian cents to yield 2.609 percent. On Friday, the 10-year yield touched its highest in nearly five years at 2.615 percent. U.S. Treasury yields advanced on Wednesday after data on U.S. producer prices rose in September.

(Reporting by Fergal Smith; Editing by Jeffrey Benkoe)