* Canadian dollar rises 0.4% against the greenback
* Price of U.S. oil rallies 14.7%
* Canadian homes sales rise 1.4% in August
* Canadian bond prices gain across a flatter yield curve
By Fergal Smith
TORONTO, Sept 16 (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Monday, before giving back some of its early gains, as oil prices soared following a weekend attack on Saudi Arabian oil facilities.
U.S. crude oil futures CLc1 settled 14.7% higher at $62.90 a barrel, the largest one-day percentage gain since December 2008, after an attack on sites run by state-owned Saudi Aramco halved the kingdom's oil production. Oil is one of Canada's major exports. would say the reaction of the loonie has been in line with the rest of FX, whereby we saw some strengthening in the oil currencies, but it has been pretty tame," said Alvise Marino, a foreign exchange strategist at Credit Suisse (SIX:CSGN) in New York.
"Markets are in a wait and see mode to see what the response to this Aramco attack is." Marino added.
U.S. President Donald Trump said it looked like Iran was responsible for attack over the weekend, but he was in no rush to respond and was still trying to find out who was behind it. 3:32 p.m. (1932 GMT), the Canadian dollar CAD=D4 was trading 0.4% higher at 1.3240 to the greenback, or 75.53 U.S. cents. The Russian ruble RUB= , another oil-linked currency, rose about 0.6%, while the Norwegian krone NOK= was up about 0.4%.
The loonie, which on Friday hit its weakest intraday level since Sept. 4 at 1.3291, traded in a range of 1.3208 to 1.3271.
The spike in crude prices came as investors awaited the outcome of the Federal Reserve's next policy meeting on Wednesday. The Fed is widely expected to ease interest rates and signal its future policy path. FEDWATCH
Meanwhile, Canadian homes sales rose 1.4% in August from July, the sixth consecutive month of increased activity, according to the Canadian Real Estate Association. data, from Statistics Canada, showed that foreign investors reduced their holdings of Canadian securities by C$1.2 billion in July, while Canadian investment in foreign securities increased by C$12.5 billion.
Canada's inflation report for August is due on Wednesday, which could help guide expectations for the Bank of Canada's interest rate outlook. BOCWATCH
Canadian government bond prices were higher across a flatter yield curve in sympathy with U.S. Treasuries. The 10-year CA10YT=RR rose 34 Canadian cents to yield 1.475%.
On Friday, the 10-year yield touched its highest since July 19 at 1.521%.