CANADA FX DEBT-Canadian dollar edges lower as factory downturn lengthens

*

Canadian dollar falls 0.1% against the greenback

*

Trades in a range of 1.3956 to 1.3991

*

Manufacturing PMI falls to 48.4 in November

*

Bond yields rise across the curve

By Fergal Smith

TORONTO, Dec 1 (Reuters) - The Canadian dollar edged lower against its U.S. counterpart on Monday, giving back some recent gains, as domestic data showed the manufacturing sector contracted at a steeper pace in November.

The loonie was trading 0.1% lower at 1.3980 per U.S. dollar, or 71.53 U.S. cents, after moving in a range of 1.3956 to 1.3991.

On Friday, the currency touched its strongest intraday level in four weeks at 1.3935 as Canadian third-quarter GDP growth surpassed forecasts.

"The CAD is retaining a good deal of the advance seen last week around the stronger than expected GDP report," Shaun Osborne and Eric Theoret, strategists at Scotiabank, said in a note.

"The data will reinforce the outlook for steady BoC policy for the foreseeable future and bolster the narrowing trend in short-term U.S./Canada yield spreads."

Investors see a roughly 90% chance the Bank of Canada will leave its benchmark interest rate on hold at a three-year low of 2.25% next week. Data on Monday was less upbeat. The S&P Global Canada Manufacturing Purchasing Managers' Index fell to 48.4 last month from 49.6 in October as trade uncertainty continued to hold back output and new orders. It marked the 10th straight month the index was below the 50.0 no-change mark. The price of oil, one of Canada's major exports, was trading 1.2% higher at $59.26 a barrel following OPEC's decision to leave output levels unchanged in the first quarter of 2026.

Canadian government bond yields moved higher across the curve, tracking moves in U.S. Treasuries. The 10-year was up 8 basis points at 3.232%, after earlier touching its highest level since November 20 at 3.237%. (Reporting by Fergal Smith; Editing by Paul Simao)