* Canadian dollar at C$1.2961, or 77.15 U.S. cents
* Loonie touched its strongest since May 23 at C$1.2819
* U.S. oil price falls 1.3 percent
* Bond prices higher across the yield curve
TORONTO, May 31 (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Thursday, reversing from an earlier one-week low, after data showed weaker-than-expected growth in the domestic economy and as investors weighed the prospect of U.S. trade tariffs.
At 9:57 a.m. EDT (2000 GMT), the Canadian dollar CAD=D4 was trading 0.7 percent lower at C$1.2961 to the greenback, or 77.15 U.S. cents.
The currency's weakest level of the session was C$1.2978, while it touched its strongest intraday since May 23 at C$1.2819.
Canada's economy grew at its slowest pace in nearly two years in the first quarter amid cooler exports and a weaker housing sector, Statistics Canada said. Gross domestic product grew in the first three months of 2018 at an annualized rate of 1.3 percent, short of expectations for 1.8 percent.
"I think the economy can still sustain a rate hike in July but it is questionable how quickly after that the Bank (of Canada) will be able to raise rates again," said Royce Mendes, senior economist at CIBC Capital Markets.
Investors had raised expectations for a rate hike as soon as July after the Bank of Canada was more hawkish than expected in a policy statement on Wednesday.
Chances of a July rate hike dipped on Thursday to 63 percent from about 70 percent before the data, the overnight index swaps market showed.
The United States said it was moving ahead with tariffs on aluminum and steel imports from Canada, Mexico and the European Union, ending a two-month exemption and potentially setting the stage for a trade war with some of America's top allies. crude oil futures CLc1 fell 1.3 percent to C$67.31. Oil is one of Canada's major exports.
Canadian government bond prices were higher across the yield curve. The 10-year CA10YT=RR rose 26 Canadian cents to yield 2.236 percent.
On Tuesday, the 10-year yield touched its lowest in nearly seven weeks since April 11 at 2.165 percent.