* Canadian dollar at C$1.2766, or 78.33 U.S. cents
* Loonie hits strongest since April 20 at C$1.2743
* Bond prices higher across flatter yield curve
TORONTO, May 10 (Reuters) - The Canadian dollar strengthened to a nearly three-week high against its U.S. counterpart on Thursday as oil prices climbed, while data showing U.S. consumer prices rebounded less than expected in April weighed on the greenback.
The price of oil, one of Canada's major exports, headed for its largest weekly increase in a month, as the market prepared for potential disruption to crude flows from major exporter Iran in the face of U.S. sanctions. crude CLc1 prices were up 0.1 percent at $71.24 a barrel.
The U.S. dollar .DXY extended losses against a basket of major currencies after the consumer price data. Some investors have been expecting an acceleration in inflation to allow the Federal Reserve to hike interest rates faster. 9:10 a.m. EDT (1310 GMT), the Canadian dollar CAD=D4 was trading 0.7 percent higher at C$1.2766 to the greenback, or 78.33 U.S. cents. The currency touched its strongest level since April 20 at C$1.2743.
The loonie has rebounded as much as 2 percent since hitting on Tuesday a nearly seven week low at C$1.2998.
Canadian new home prices were unchanged in March, as expected, as higher prices in Ottawa were offset by a weaker Toronto market, data from Statistics Canada showed.
Canadian government bond prices were higher across a flatter yield curve in sympathy with U.S. Treasuries. The two-year CA2YT=RR rose 1 Canadian cent to yield 1.953 percent and the 10-year CA10YT=RR gained 13 Canadian cents to yield 2.379 percent.
The 2-year yield touched its highest intraday since June 2011 at 1.964 percent.
Canada's jobs report for April is due on Friday.