CANADA FX DEBT-C$ strengthens to 2-1/2-month high; up 1.8 pct for week

* Canadian dollar settles at C$1.3514, or 74.00 U.S. cents * Currency touched its highest since Dec. 8 at C$1.3505 * Bond prices lower across the maturity curve By Marwa Siam-Abdou TORONTO, Feb 26 (Reuters) - The Canadian dollar strengthened on Friday, touching a 2-1/2-month high against its broadly stronger U.S. counterpart as an uptrend in crude oil prices and a broad gain for equities helped lock in a 1.8 percent appreciation for the week.

Crude slipped slightly on Friday as investors cashed out big weekly profits, while upbeat economic data out of the United States also provided a boost to Canada, which does much of its trade with its southern neighbor.

"Oil is stabilizing," said Jack Spitz, managing director of foreign affairs at National Bank Financial, adding that trends in the oil market give "some reason for optimism." The Canadian dollar settled at C$1.3514 to the greenback, or 74.00 U.S. cents, stronger than Thursday's official close of C$1.3541, or 73.85 U.S. cents.

The currency's touched its strongest level since Dec. 8 at C$1.3505, while its weakest was C$1.3564.

The loonie, as Canada's currency is colloquially known, had hit a 12-year weak spot near C$1.47 in mid-January, but has since recovered steadily. The currency has been helped by stabilization in crude oil prices and the shifting of the fiscal stimulus burden from the Bank of Canada to the Canadian government.

Spitz said the currency's recent stronger range has encouraged a more balanced market of buyers and sellers.

Adding to support for the risk-sensitive commodity currency, stock markets inched higher for the third day in five as G20 policymakers meeting in Shanghai sought to find common ground on how to reboot a struggling global economy.

While the U.S. dollar softened against the loonie, the greenback rose against a basket of major currencies, helped by an upward revision to U.S. fourth quarter growth.

The implied probability of a Bank of Canada rate cut by mid-year has dropped to 32 percent from around 60 percent at the start of the week.

Canadian government bond prices were lower across the maturity curve on reduced demand for safe haven assets. The two-year price fell 5 Canadian cents to yield 0.519 percent and the benchmark 10-year was down 37 Canadian cents to yield 1.183 percent.

(Additional reporting by Fergal Smith; Editing by Cynthia Osterman)