* Canadian dollar strengthens 0.3% against the greenback
* Touches an earlier 10-day low at 1.3734
* For the quarter, the loonie weakens 0.9%
* Bond yields rise/fall across the curve
TORONTO, June 28 (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Friday as domestic data showed the economy growing in both April and May, but the currency still posted its second straight quarterly decline.
The loonie was trading 0.3% higher at 1.3665 to the U.S. dollar, or 73.18 U.S. cents, regaining some ground after it earlier touched its weakest level since June 18 at 1.3734.
For the month, the currency weakened 0.3% as the Bank of Canada became the first G7 central bank to cut interest rates, while it was down 0.9% for the second quarter.
Canada's gross domestic product increased 0.3% in April, matching market expectations, as growth rebounded in sectors including wholesale trade and manufacturing, while an advanced estimate showed the economy expanding a further 0.1% in May.
"After struggling to grow at all through the last three quarters of 2023, the Canadian economy is showing a bit more of a pulse so far this year," Doug Porter, chief economist at BMO Capital Markets, said in a note.
"On balance, growth is holding up a touch better than widely expected in 2024, but remains generally lacklustre."
Investors see a roughly 45% chance the BoC would ease further at its next policy decision on July 24, down from 65% before hotter-than-expected domestic inflation data on Tuesday.
The U.S. dollar edged lower against a basket of major currencies, giving back some recent gains, as U.S. inflation data bolstered expectations the Federal Reserve would start cutting interest rates this year.
Canadian bond yields were mixed across a steeper curve in a shortened session ahead of a market holiday for Canada Day on Monday.
The 10-year was up 3.1 basis points at 3.507%, approaching the two-week high it touched during Thursday's session at 3.522%. (Reporting by Fergal Smith)
