* US dollar rises broadly, weighs on CAD
* Commodities mixed: metals down, oil recovers
* Spread between U.S.-Canadian 10-year yields continue to widen
By Gertrude Chavez-Dreyfuss
July 19 (Reuters) - The Canadian dollar fell to a three-week low against a broadly strong U.S. dollar on Thursday, hammered by weaker commodity prices and lingering uncertainty about global trade after President Donald Trump said the United States wants to negotiate bilateral deals with Canada and Mexico.
In midmorning trading, the U.S. dollar rose 0.7 percent against the Canadian currency to C$1.3256 CAD=D3 , after earlier hitting a three-week peak of $1.3268. So far this year, the Canadian dollar has struggled, down 5.4 percent against the greenback.
Against a basket of six major currencies, the U.S. dollar gained 0.3 percent to 95.403 .DXY .
The Canadian dollar, meanwhile, also fell against the euro, which rose 0.4 percent to C$1.5383 EURCAD= . It also slipped against sterling, which gained 0.1 percent to C$1.7226 GBPCAD= .
Lower commodity prices weighed on the commodity-based Canadian currency. Metal prices were down with gold XAU=EBS and silver XAG=EBS on the defensive.
Benchmark Brent crude oil LCOc1 and U.S. crude futures CLc1 have recovered in the New York session, after posting losses earlier in global trading.
Brent has fallen almost 9 percent from last week's high above $79 on emerging evidence of higher production from Saudi Arabia and other members of the Organization of the Petroleum Exporting Countries.
Global trade issues, meanwhile, remained a headwind for the Canadian dollar.
A day after Trump said he may negotiate separate trade deals with North American Free Trade Partners Mexico and Canada, David MacNaughton, Canada's ambassador to the United States, said he was confident that talks to modernize NAFTA would maintain the trilateral nature of the pact. was not the first time that Trump had suggested bilateral deals with Mexico and Canada, as he vowed to deliver on his campaign promise to revamp NAFTA.
"From Canada and Mexico's standpoint, it's not clear what their incentive is to engage in bilateral talks. Such a setup would weaken their leverage in negotiations and strengthen the U.S. from a leverage point of view," said Mazen Issa, senior FX strategist at TD Securities in New York.
Meanwhile, Canadian government bond prices were higher across the curve and yields were lower, tracking the U.S. Treasuries market.
The two-year yield CA2YT=RR fell to 1.933 percent, compared with 1.953 percent late on Wednesday, while the 10-year CA10YT=RR was down at 2.116 percent from Wednesday's 2.149 percent.
The spread between the U.S. 10-year Treasury and Canadian 10-year yields widened slightly on Thursday to nearly 74.34 basis points US10CA10=RR . The yield gap has expanded since the beginning of the year in favor of the U.S. dollar.