* Canadian dollar at C$1.2961, or 77.15 U.S. cents
* Price of U.S. oil falls 1.2 percent
* Bond prices lower across the yield curve
TORONTO, June 1 (Reuters) - The Canadian dollar was little changed against its U.S. counterpart on Friday as data showing acceleration in domestic manufacturing growth offset lower oil prices and the prospect of an escalating trade quarrel.
Growth in the Canadian manufacturing sector accelerated in May to its fastest pace in more than seven years as new orders and inventories climbed. The IHS Markit Canada Manufacturing Purchasing Managers' Index rose to a seasonally-adjusted 56.2 last month from 55.5 in April. crude oil futures CLc1 were down 1.2 percent at $66.24 a barrel as U.S. oil output comes close to matching that of top producer Russia. Oil is one of Canada's major exports. President Donald Trump fired back at Canada after Ottawa and other American allies retaliated against Washington's steel and aluminum tariffs, and appeared to threaten possible action against Canada's lumber industry. 9:53 a.m. EDT (1353 GMT), the Canadian dollar CAD=D4 was nearly unchanged at C$1.2961 to the greenback, or 77.15 U.S. cents. The currency traded in a range of C$1.2931 to C$1.3009.
For the week, the loonie is on track to rise 0.1 percent. It was boosted on Wednesday by a more hawkish than expected policy statement from the Bank of Canada, which increased chances of an interest rate hike as soon as July. BOCWATCH
But the currency lost ground on Thursday after data showed weaker-than-expected growth in the domestic economy and the U.S. imposed tariffs. U.S. dollar .DXY climbed on Friday against a basket of major currencies, helped by data showing U.S. job growth accelerated in May and the unemployment rate dropped to an 18-year low of 3.8 percent. government bond prices were lower across the yield curve in sympathy with U.S. Treasuries. The 10-year CA10YT=RR fell 11 Canadian cents to yield 2.258 percent.
The gap between Canada's 10-year yield and its U.S. equivalent widened by 7 basis points to a spread of -64.6 basis points.