(Adds strategist quotes and details throughout; updates prices) * Loonie weakens 0.2% against the greenback * Canadian manufacturing PMI falls to lowest since February * Price of U.S. oil settles nearly 1% lower * Canadian 10-year yield touches its lowest since Feb. 18 By Fergal Smith TORONTO, Aug 3 (Reuters) - The Canadian dollar edged lower against its U.S. counterpart on Tuesday, as oil prices fell and domestic data showed factory activity in July growing at the slowest pace in five months. The Canadian dollar weakened 0.2% to 1.2535 to the greenback, or 79.78 U.S. cents, after declines on Friday and Monday. It traded in a range of 1.2489 to 1.2575. The loonie "took its cue from oil prices," said Ronald Simpson, managing director, global currency analysis at Action Economics. U.S. crude oil futures settled nearly 1% lower at $70.56 a barrel as concern over rising cases of the Delta coronavirus variant in some major economies, including the United States and China, offset expectations for U.S. inventories to fall. Oil and risk appetite will help determine the Canadian dollar"s performance ahead of domestic data later in the week, Simpson said. Canadian international merchandise trade data for June is due on Thursday and the July employment report is due on Friday. On Tuesday, the IHS Markit Canada Manufacturing Purchasing Managers" Index (PMI) fell to a seasonally adjusted 56.2 in July from 56.5 in June, as supply chain pressures brought on by the pandemic weighed. It was the lowest reading since February but still well above the 50 threshold which shows growth in the sector. Canadian government bond yields were lower across a flatter curve, playing catch up with U.S. Treasuries after the Canadian market was closed on Monday for the Civic Holiday. The 10-year touched its lowest since Feb. 18 at 1.100% before rebounding slightly to 1.121%, down 8.2 basis points on the day. (Reporting by Fergal Smith; editing by Barbara Lewis) Our Standards: The Thomson Reuters Trust Principles.