* Canadian dollar at C$1.2571, or 79.55 U.S. cents
* Bond prices mixed across flatter yield curve
TORONTO, April 17 (Reuters) - The Canadian dollar steadied against its U.S. counterpart on Tuesday, holding near last week's seven-week high, as investors digested stronger-than-expected domestic manufacturing data ahead of a Bank of Canada interest rate decision on Wednesday.
Canadian factory sales grew by 1.9 percent in February from January on higher sales in the transportation equipment industry, Statistics Canada said. Analysts had forecast an increase of 1.0 percent. a cool start to the year, factories were humming again in February," Royce Mendes, a senior economist at CIBC Capital Markets, said in a research note.
Money markets do not expect the Bank of Canada to raise interest rates this week. But central bank optimism about the country's economic outlook could raise expectations for a hike as soon as next month. BOCWATCH
At 9:14 a.m. EDT (1314 GMT), the Canadian dollar CAD=D4 was trading 0.1 percent lower at C$1.2571 to the greenback, or 79.55 U.S. cents.
The currency traded in a narrow range between C$1.2550 to C$1.2579. On Wednesday, it reached its strongest level in more than seven weeks at C$1.2545.
The modest decline for the loonie came as the price of oil, one of Canada's major exports, fell despite investors' growing concern over the potential for disruptions to crude supply, especially in the Middle East. crude CLc1 prices were down 0.7 percent at $65.77 a barrel.
The ministers leading the renegotiation of the North American Free Trade Agreement could meet again on Thursday in Washington as they push for quick progress, Mexican Economy Minister Ildefonso Guajardo said on Monday. sends about 75 percent of its exports to the United States. Its economy could benefit if a deal is reached to revamp NAFTA.
Canadian government bond prices were mixed across a flatter yield curve, with the two-year CA2YT=RR price down 0.5 Canadian cent to yield 1.881 percent and the benchmark 10-year CA10YT=RR rising 6 Canadian cents to yield 2.266 percent.
On Monday, the 10-year yield touched its highest level in nearly four weeks at 2.292 percent.