CANADA FX DEBT-Canadian dollar notches weekly gain as Wall Street rallies

 (Adds strategist quotes and details throughout; updates prices)
    * Canadian dollar gains 0.4% against the greenback
    * Canadian economy likely expanded 0.7% in August
    * Price of U.S. oil settles 1.1% higher
    * Canadian bond yields ease across flatter curve

    By Fergal Smith
    TORONTO, Oct 1 (Reuters) - The Canadian dollar strengthened
against its U.S. counterpart on Friday as stock markets rose and
domestic data showed the economy rebounding in August, leaving
the currency slightly higher for the week.
    The loonie        was trading up 0.4% at 1.2630 to the
greenback, or 79.18 U.S. cents, after trading in a range of
1.2628 to 1.2738.
    For the week, the currency advanced 0.2% even as the
greenback        notched sharp gains against a basket of major
currencies.
    The Canadian dollar was helped on Friday by "a risk-on tone
re-emerging in markets and also the slight improvement that
we're seeing in oil prices," said Kurt Reiman, senior investment
strategist for North America at BlackRock.
    Wall Street advanced in a broad rally, after sorting out
conflicting news about the economy, the battle against COVID-19,
and legislative wrangling in Washington at the start of the
fourth quarter.             
    "We still think that this pro-cyclical economic environment
is supportive for stocks and typically the loonie has that
pro-cyclical bent," Reiman said.
    Pro-cyclical currencies tend to benefit from global economic
growth. Canada is a major producer of commodities, including
oil.
    U.S. crude oil futures        settled 1.1% higher at $75.88
a barrel, supported by tight supplies due to OPEC+ supply curbs.
            
    Canada's economy expanded 0.7% in August after a slight
contraction in July, buoyed by growth in the hospitality
industry, preliminary data showed.             
    Separate data showed that Canadian manufacturing activity
grew in September at a pace that was little changed from the
prior month's robust level, while global supply shocks helped to
lift measures of inflation to record highs.                     
    Canadian government bond yields were lower across a flatter
curve, tracking the move in U.S. Treasury yields. The 10-year
            eased 3.5 basis points to 1.473%, after touching on
Tuesday its highest in nearly four months at 1.526%.

 (Reporting by Fergal Smith; Editing by Mark Heinrich and Ken
Ferris)