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CANADA FX DEBT-C$ hits 2-week low as global trade tensions rise

* Canadian dollar dips 0.1% against the greenback

* Loonie touches its weakest since April 25 at 1.3505

* Canada's trade deficit narrows to C$3.21 billion in March

* Canadian bond prices rise across a flatter yield curve

TORONTO, May 9 (Reuters) - The Canadian dollar weakened to a two-week low against the greenback on Thursday as domestic data showed a wider-than-expected trade deficit and as investors feared the trade dispute between the United States and China could escalate.

Global equities slumped to a more than five-week

low after U.S. President Donald Trump ratcheted up trade tensions with China ahead of a high-stakes negotiation.

Canada runs a current account deficit and exports many commodities, including oil, so its economy could be hurt by a slowdown in the global flow of capital or trade. Canada's trade deficit in March shrank slightly to C$3.21 billion as higher energy shipments helped exports increase at a slightly faster rate than imports, Statistics Canada said. The deficit was greater than the C$2.45 billion shortfall that analysts had predicted. The price of oil fell as worries about the U.S.-China trade dispute counteracted a surprise decline in U.S. crude

inventories. U.S. crude oil futures were down 0.90% to

$61.56 a barrel.

At 9:17 a.m. (1317 GMT), the Canadian dollar was

trading 0.1% lower at 1.3498 to the greenback, or 74.09 U.S. cents. The currency touched its weakest intraday level since April 25 at 1.3505. Separate data showed that new housing prices in Canada were unchanged in March for the seventh month out of eight, with little or no growth in the major markets of Toronto and Vancouver. Canada's jobs report for April 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 5.5 Canadian cents to yield 1.569% and the

10-year climbed 41 Canadian cents to yield 1.663%.

(Reporting by Fergal Smith; Editing by David Gregorio)