Canadian dollar dips as investors weigh ECB's stimulus pledge



* Canadian dollar weakens 0.2% against the greenback

* Flash estimate shows Canadian factory sales up 1.9% in June

* Price of U.S. oil rises 0.7%

* Canadian bond yields ease across a flatter curve

TORONTO, July 22 (Reuters) - The Canadian dollar edged lower against its U.S. counterpart on Thursday, giving back some of its gains over the last two days as dovish guidance from the European Central Bank helped to boost the greenback against a basket of major currencies.

The Canadian dollar CAD= was 0.2% lower at 1.2575 versus the greenback, or 79.52 U.S. cents, after trading a range of 1.2529 to 1.2593.

The U.S. dollar broadly rose after the ECB's pledge to keep interest rates at record lows for even longer pressured the euro EUR= , with the central bank warning that the Delta variant of the novel coronavirus posed a risk to the euro zone's recovery.

Canada is a major producer of commodities, including oil, so threats to global economic growth could weigh on the loonie. On Monday, the currency touched a five-month low at 1.2807.

Still, oil extended strong gains made in previous sessions on expectations of tighter supplies until the end of the year. U.S. crude CLc1 prices were up 0.7% at $70.80 a barrel.

In domestic data, a preliminary estimate from Statistics Canada showed that manufacturing sales rose 1.9% in June, led by the transportation equipment industry.

The Canadian retail sales report for May is due on Friday, which could offer further clues on the strength of the domestic economy.

Canadian government bond yields eased across a flatter curve, with the 10-year CA10YT=RR down 1.6 basis points at 1.206%. On Monday, it touched a five-month low at 1.097%.
Reporting by Fergal Smith; editing by Barbara Lewis

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