* Canadian dollar falls 0.2% against the greenback

* Touches its strongest since March 13 at 1.36315

* Price of oil settles 2.8% higher

* Bond yields rise across the curve

By Fergal Smith

TORONTO, April 21 (Reuters) - The Canadian dollar

weakened against its U.S. counterpart on Tuesday as uncertain

prospects for Middle East pace talks weighed on investor

sentiment, with the currency pulling back from its strongest

level in nearly six weeks.

The loonie was trading 0.2% lower at 1.3667 per

U.S. dollar, or 73.17 U.S. cents, after touching its strongest

intraday level since March 13 at 1.36315.

"CAD stays resilient while escalation risk is contained and

the broader U.S. dollar conflict premium continues to unwind,

but it remains vulnerable to a renewed USD bid if the ceasefire

is not extended or diplomacy stalls," said Kevin Ford, FX &

macro strategist at Convera.

Iran said it had still yet to decide whether to attend

last-ditch peace talks with the United States, after U.S. forces

boarded a huge Iranian oil tanker at sea with just a day left

before the ceasefire runs out in the war in the Gulf.

The price of oil, one of Canada's major exports,

settled 2.8% higher at $92.13 a barrel as shipping traffic

through the Strait of Hormuz remained largely halted, while the

U.S. dollar advanced against a basket of major

currencies.

Retail sales data that pointed to a strong U.S. economy

added to support for the greenback.

"For now, markets are in a wait-and-watch mode," Ford said.

"Until there is clearer, tangible progress, geopolitical risk is

likely to keep overshadowing domestic policy developments and

leave USD-CAD highly sensitive to headline swings."

Canada's Prime Minister Mark Carney announced a new, expanded

advisory committee on Canada-United States economic relations,

retaining only four people from the previous council formed

under former Prime Minister Justin Trudeau.

Canadian bond yields moved higher across the curve, tracking

moves in U.S. Treasuries. The 10-year was up 4.6

basis points at 3.485%.