(Adds strategist quotes and details throughout; updates prices) * Canadian dollar strengthens 0.5% against the greenback * Touches strongest level since Sept. 7 at 1.2557 * Price of U.S. oil settles 2.3% higher * Canadian bond yields rise across a steeper curve By Fergal Smith TORONTO, Oct 4 (Reuters) - The Canadian dollar on Monday strengthened to its highest level in nearly four weeks against its U.S. counterpart as higher oil prices played a bigger role in driving the currency than a selloff on Wall Street. The Canadian dollar was last trading 0.5% higher at 1.2578 to the greenback, or 79.50 U.S. cents, after touching its strongest level since Sept. 7 at 1.2557. The jump in oil prices is "taking precedence today over U.S. equities and front-end (bond) yields," said Simon Harvey, senior FX market analyst for Monex Europe and Monex Canada. Canada"s commodity-linked currency often moves in the same direction as Wall Street because of the signal stocks send about global economic prospects. Oil rose to a three-year peak after OPEC+ confirmed it would stick to its current output policy as demand for petroleum products rebounds across the world. U.S. crude oil futures settled 2.3% higher at $77.62 a barrel, while Wall Street"s main indexes tumbled as investors shifted out of technology stocks in the face of rising U.S. Treasury yields. The U.S. dollar fell against a basket of major currencies, pulling back from the 1-year high hit last week, as traders looked to U.S. jobs data at the end of the week for clues to the Federal Reserve"s next move. The Canadian employment report is also due on Friday, which a Reuters poll forecast will show 65,000 jobs added last month. The data could give the loonie another boost, Harvey said. "There are still (economic) tailwinds to provide the Canadian reading with a positive surprise." Canadian government bond yields were higher across a steeper curve, with the 10-year up 2.8 basis points at 1.499%. On Friday, Canada"s 10-year yield moved above its U.S. equivalent for the first time since April last year. (Reporting by Fergal Smith; Editing by Emelia Sithole-Matarise and Sandra Maler) Our Standards: The Thomson Reuters Trust Principles.