Canadian dollar steadies near 2-month low as Omicron risk weighs

* Canadian dollar rises 0.1% against the greenback

* Matches Tuesday's 10-week low of 1.2837

* Price of U.S. oil settles 1.4% higher

* Canadian 10-year yield hits its lowest in nearly two months

By Fergal Smith

TORONTO, Dec 2 (Reuters) - The Canadian dollar strengthened slightly against the greenback on Thursday but held near its lowest level in over two months, as investors assessed the global economic impact of the Omicron coronavirus variant and looked ahead to domestic data.

The Canadian dollar CAD= was trading 0.1% higher at 1.2807 to the greenback, or 78.08 U.S. cents, after touching intraday 1.2837, which was the 10-week low it hit on Tuesday.

"We've got ongoing uncertainty from the Omicron scare, uncertainty related to U.S. politics heating up as we get close to deadlines on all kinds of stuff," said Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets. "That uncertainty tends to lift USD-CAD."

"But at the same time resistance (at 1.2850) ... seems reasonably solid for now," Anderson added.

The U.S. federal government is approaching its $28.9 trillion borrowing limit, which the Treasury Department has estimated it could reach by Dec. 15. Failure to extend or lift the limit in time could trigger an economically catastrophic default.

Global equity markets remained volatile as countries ramped up restrictions to curb the variant's spread.

The price of oil CLc1 , one of Canada's major exports, clawed back some recent losses as OPEC+ stuck to its policy of incrementally boosting output. U.S. crude oil futures CLc1 settled 1.4% higher at $66.50 a barrel.

The Canadian employment report for November is due on Friday, which could offer clues on the strength of the domestic economy.

Canadian Prime Minister Justin Trudeau's government will outline limited new spending in a fiscal update to be released later this month, a source said, as inflation soars and some business groups and opposition politicians call for restraint.

Canadian 10-year CA10YT=RR touched its lowest intraday level since Oct. 4 at 1.472% before recovering to 1.499%, up about half a basis point on the day.
Reporting by Fergal Smith; editing by Barbara Lewis and Richard Chang

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