(Adds analyst quote and details throughout; updates prices) * Loonie trades in a range of 1.2576 to 1.2647 * U.S. crude oil settles 1.9% lower * Canadian 10-year yield touches a 4-month high at 1.554% By Fergal Smith TORONTO, Oct 6 (Reuters) - The Canadian dollar was little changed against the greenback on Wednesday as hopes rose that Washington could reach a deal to avoid a U.S. government debt default, with the currency clawing back its earlier decline. Wall Street rose, recouping early losses, as top U.S. Senate Republican Mitch McConnell said his party would support an extension of the federal debt ceiling into December, a move that would head off a historic default with a heavy economic toll. Canada sends about 75% of its exports to the United States. Earlier, the loonie was pressured by worries that soaring energy prices would add to inflation pressures, reducing prospects of global economic recovery. "Given the concerns over the growth hit, even the rise in commodity prices is having a muted effect on supporting the loonie," said Simon Harvey, senior FX market analyst for Monex Europe and Monex Canada. Canada is a major producer of commodities. U.S. oil futures pulled back from multi-year highs, settling 1.9% lower at $77.43 a barrel, as an unexpected rise in U.S. crude inventories prompted buyers to take a breather. The Canadian dollar was trading nearly unchanged at 1.2587 to the greenback, or 79.45 U.S. cents, even as the greenback gained ground against a basket of major currencies. The loonie traded in a range of 1.2576 to 1.2647. On Tuesday, it touched its strongest intraday level since Sept. 7 at 1.2541. Canada"s employment report for September is due on Friday, which could offer clues on the Bank of Canada policy outlook. Analysts expect the central bank to further cut its bond purchase program later this month. Canadian government bond yields were lower across much of a flatter curve. The 10-year eased 2.4 basis points to 1.509%, after touching its highest since May 25 at 1.554% earlier in the session. (Reporting by Fergal Smith; Editing by Kirsten Donovan and Marguerita Choy) Our Standards: The Thomson Reuters Trust Principles.