CANADA FX DEBT-Canadian dollar edges higher as China jitters ease

* Canadian dollar strengthens 0.1% against greenback * Canadian factory sales likely up 0.5% in August * Price of U.S. oil increases 1.3% * Canadian bond yields little changed TORONTO, Sept 22 (Reuters) - The Canadian dollar rose against the greenback on Wednesday as worries about the potential collapse of property developer China Evergrande receded and domestic data showed that factory sales likely rose in August, but gains were capped ahead of the release of the Federal Reserve's latest policy statement. Shares globally gained ground as China Evergrande struck a deal to pay a coupon on one of its domestic bonds. Worries over a possible default by China's No. 2 property developer have weighed on financial markets in recent days. Canada is a major exporter of commodities, including oil, so the loonie tends to be sensitive to investor appetite for risk. Oil prices increased after industry data showed U.S. crude stocks fell more than expected last week in the wake of two hurricanes, highlighting tight supply as demand improves. U.S. crude futures were up 1.3% at $71.41 a barrel, while the Canadian dollar gained 0.1% to 1.2805 per greenback, or 78.16 U.S. cents. The Canadian currency has recovered from the one-month low of 1.2895 hit on Monday, helped by the removal of uncertainty over the outcome of the Sept. 20 federal election. Prime Minister Justin Trudeau's Liberals fell short of winning a majority in the election, leaving his government once again dependent on opposition legislators to pass legislation. Canadian factory sales rose 0.5% in August, driven by higher sales of petroleum and coal products, chemical and primary metal industries, a flash estimate from Statistics Canada showed. The Fed is due to release its latest policy statement and economic projections at 2 p.m. EDT (1800 GMT). It is expected to clear the way for reductions to its monthly asset purchases later this year. Canadian government bond yields were little changed across the curve, with the 10-year dipping less than half a basis point to 1.225%. (Reporting by Fergal Smith Editing by Paul Simao)