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CANADA FX DEBT-C$ weakens as investors fret about U.S.-China trade talks

* Canadian dollar falls 0.1% against the greenback

* Price of U.S. oil falls decreases 1.4%

* Canadian bond prices rise across a flatter yield curve

* Gap between 2- and 10-year yields hits narrowest in five weeks

TORONTO, May 7 (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Tuesday as investors worried that trade negotiations between the United States and China were unraveling, which could hurt the global economy. Global stocks added to this week's losses after U.S. President Donald Trump in a surprise move on Sunday threatened to hike tariffs on Chinese goods this week. U.S. officials have said China has backtracked on substantial commitments made during months of negotiations. Canada runs a current account deficit and exports many commodities, including oil, so its economy could suffer if the global flow of capital or trade slows.

U.S. crude oil futures were down 1.4% at $61.41 a

barrel.

At 9:43 a.m. (1343 GMT), the Canadian dollar was

trading 0.1% lower at 1.3471 to the greenback, or 74.23 U.S. cents. The currency traded in a range of 1.3410 to 1.3485. On Monday, Bank of Canada Governor Stephen Poloz said it was impossible to predict the consequences of an escalation in the U.S.-China trade dispute. He also said the housing sector was solid despite a series of challenges and called for a more flexible mortgage market to help make the country's financial system safer. Canadian housing starts data for April is due on Wednesday, while the April jobs report is due on Friday. Canadian government bond prices were higher across a flatter yield curve in sympathy with U.S. Treasuries. The two-year rose 4 Canadian cents to yield 1.600% and the 10-year climbed 30 Canadian cents to yield 1.704%. The gap between Canada's 2- and 10-year yields narrowed by 1.1 basis points to a spread of 10.4 basis points, its narrowest since April 1.

(Reporting by Fergal Smith Editing by Alistair Bell)