* Canadian dollar at C$1.2970, or 77.10 U.S. cents
* Loonie touches its weakest since May 8 at C$1.2979
* Oil prices fall 2.6 percent
* Bond prices higher across a flatter yield curve
TORONTO, May 25 (Reuters) - The Canadian dollar weakened to a more than two-week low against its U.S. counterpart on Friday as oil prices fell and the greenback broadly climbed.
The price of oil, one of Canada's major exports, slumped after Saudi Arabia and Russia said they were ready to ease supply curbs that have pushed crude prices to their highest since 2014. crude CLc1 prices were down 2.6 percent at $68.88 a barrel.
The U.S. dollar .DXY gained against a basket of major currencies as rising bond yields in Italy and brewing political instability in Spain weighed on the euro. 9:16 a.m. EDT (1316 GMT), the Canadian dollar CAD=D4 was trading 0.7 percent lower at C$1.2970 to the greenback, or 77.10 U.S. cents. The currency touched its weakest level since May 8 at C$1.2979.
On Thursday, the loonie had been pressured by the potential imposition of U.S. auto tariffs, after the Trump administration launched a national security investigation into car and truck imports. is a major exporter of autos to the United States so its economy could be hurt by U.S. auto tariffs.
Canadian police were looking for two suspects who walked on Thursday into a crowded restaurant in a Toronto suburb and detonated a bomb, injuring 15 people. The police said the incident did not appear to be a hate crime or linked to international terror. government bond prices were higher across a flatter yield curve in sympathy with U.S. Treasuries. The two-year CA2YT=RR rose 6 Canadian cents to yield 1.965 percent and the 10-year CA10YT=RR climbed 42 Canadian cents to yield 2.364 percent.