* Canada's annual inflation rate accelerates to 2.9%

* BoC July rate cut chances fall below 50%

* Price of U.S. oil declines 0.7%

* Canada-US 10-year spread narrows 5.6 basis points

TORONTO, June 25 (Reuters) - The Canadian dollar was little changed against its broadly stronger U.S. counterpart on Tuesday, as investors priced in a less than even chance the Bank of Canada would cut interest rates next month after hotter-than-expected inflation data.

Canada's annual inflation rate unexpectedly accelerated to 2.9% in May from 2.7% in April while key measures of core inflation edged up for the first time in five months.

"It's difficult to say at this juncture if the May CPI print is simply giving back a more rapid pace of inflation deceleration exhibited over the last four months, or if new price pressures are emerging," Geoff Phipps, a trading strategist and portfolio manager at Picton Mahoney, said in a note.

"Whether or not July is a live meeting for a further cut will depend on upcoming data, of which there is plenty before the July meeting."

Investors see a 45% chance that the BoC will cut rates at its next policy decision on July 24, down from 65% before the inflation report, swaps market data showed.

Earlier this month, the BoC became the first G7 central bank to begin easing, lowering its benchmark rate by 25 basis points to 4.75%.

The Canadian dollar was trading nearly unchanged at 1.3650 per U.S. dollar, or 73.26 U.S. cents, after trading in a range of 1.3632 to 1.3680.

It was the only currency other than sterling not to lose ground against the U.S. dollar after hawkish comments from a Federal Reserve official.

The price of oil, one of Canada's major exports, was down 0.7% at $81.08 a barrel, while Canadian bond yields climbed across the curve.

The 10 year was up 5 basis points at 3.382%, with the gap between it and the U.S. equivalent narrowing by 5.6 basis points to 86 basis points in favor of the U.S. note. (Reporting by Fergal Smith in Toronto; Editing by Anil D'Silva and Matthew Lewis)