* Canadian dollar at C$1.2584, or 79.47 U.S. cents
* Bond prices lower across a steeper yield curve
* 10-year yield touches nearly four-week high at 2.292 percent
TORONTO, April 16 (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Monday after Canadian Prime Minister Justin Trudeau moved the day before to end an escalating crisis over a Kinder Morgan (NYSE:KMI) Canada Ltd KML.TO oil pipeline.
Trudeau, who attended an emergency summit on Sunday with the premiers of Alberta and British Columbia, said Ottawa was prepared to offer financial aid to ensure the project went ahead. to build the pipeline could weigh on the outlook for Canadian crude oil, which tends to trade at a discount to U.S crude. Oil is one of Canada's major exports.
At 9:46 a.m. EDT (1346 GMT), the Canadian dollar CAD=D4 was trading 0.2 percent higher at C$1.2584 to the greenback, or 79.47 U.S. cents. The currency traded in a range of C$1.2576 to C$1.2623.
Gains for the loonie came as the U.S. dollar broadly fell. The greenback remained at lower levels against a basket of currencies as U.S. retail sales in March rose following three months of declines, but failed to dispel some traders' worries about economic growth cooling. Wednesday, the loonie was at its strongest in more than seven-weeks at C$1.2545. It has been boosted recently by a three-year high for oil.
But U.S. crude CLc1 prices were down 1.4 percent on Monday at $66.42 a barrel after U.S. drilling activity rose and fears waned about tensions in the Middle East following air strikes on Syria over the weekend. Bank of Canada is expected to leave its benchmark interest rate unchanged at 1.25 percent when it announces on Wednesday its latest interest rate decision. Domestic inflation data is due on Friday.
Canadian government bond prices were lower across a steeper yield curve in sympathy with U.S. Treasuries, as U.S. stocks climbed. The two-year CA2YT=RR fell 2 Canadian cents to yield 1.874 percent and the 10-year CA10YT=RR declined 29 Canadian cents to yield 2.278 percent.
The 10-year yield touched its highest since March 21 at 2.292 percent.