* Canadian dollar strengthens 0.1% against the greenback * Loonie trades in a range of 1.2563 to 1.2599 * Price of U.S. oil falls nearly 1% * Canadian 2-year yield touches a 19-month high at 0.621% TORONTO, Oct 7 (Reuters) - The Canadian dollar edged higher against its U.S. counterpart on Thursday as improved investor sentiment offset a pull back in oil prices, but the currency stuck to a narrow trading range ahead of a speech by Bank of Canada Governor Tiff Macklem. World stock markets put their foot back on the gas as hopes grew that Washington could resolve its debt-ceiling squabbles and a global drop in energy prices tempered deepening fears of "stagflation". The price of oil, one of Canada"s major exports, extended its pull back from a seven-year high in the previous session as the United States said it was considering selling oil from its strategic reserves and as Russia said it was ready to stabilize the natural gas market. U.S. crude prices fell nearly 1% to $76.69 a barrel, while the Canadian dollar was trading 0.1% higher at 1.2575 to the greenback, or 79.52 U.S. cents. The currency traded in a range of 1.2563 to 1.2599. On Tuesday, it touched a four-week high at 1.2541. Still, analysts see less room for the Canadian dollar to gain ground over the coming year as the prospect of slower global economic growth and accelerating inflation undermine support from higher oil prices. Macklem is due to speak at 12 p.m. ET (1645 GMT) on global financial architecture. Analysts expect the Bank of Canada to further cut its bond purchase program later this month. Canadian government bond yields were higher across the curve. The 10-year rose 1.1 basis points to 1.520%, while the 2-year touched its highest since March last year at 0.621%. (Reporting by Fergal Smith; Editing by Kirsten Donovan) Our Standards: The Thomson Reuters Trust Principles.