WRAPUP 1-Canada Jan trade surplus widens on export surge

OTTAWA, March 11 (Reuters) - Canada's trade surplus rebounded in January from a nine-year low in December as exports rose at their fastest pace in over a year due to high commodities prices, Statistics Canada said on Tuesday.

But economists warned that export volumes were weak, suggesting a continued slowing of growth and more interest rate cuts by the Bank of Canada.

The trade surplus grew to C$3.26 billion ($3.29 billion) from C$2.29 billion in December, beating the average forecast in a Reuters poll of a surplus of C$2.6 billion.

Despite sharply weaker demand from the United States, Canada's top trading partner, exports surged 3.6 percent in January to C$37.98 billion, the fastest growth since December 2006. Shipments by most sectors -- led by energy products and industrial goods -- outweighed a decline in exports by the auto sector.

Canadian exports to the United States grew more sharply than imports, Statscan said.

But Statscan said export volumes fell 0.6 percent in January while prices rose 4.2 percent.

"This does not bode well for first-quarter GDP in Canada, which looks like it could be hard-pressed to reach the Bank of Canada's 0.6% forecast, and is looking more and more likely to come in below zero," Jacqui Douglas, economics strategist at TD Securities, said in an email note.

"We think that this will lead the Bank of Canada to cut the overnight rate by a further 50 basis points on April 22," she said.

The central bank has cut its key overnight lending rate by a full percentage point since December and has signaled more easing to come.

Canada's imports expanded by 1 percent to C$34.72 billion on a surge in energy product purchases.

The trade surplus with the United States swelled to C$6.2 billion in January from C$6.01 billion in December. Canada's deficit with non-U.S. trading partners narrowed to C$2.9 billion.

The trade numbers likely mean Canada will continue to have a current account deficit in the first quarter of this year, said Doug Porter, deputy chief economist at BMO Capital Markets. Canada fell into deficit in the fourth quarter of 2007 for the first time since 1999.

"With U.S. demand likely to sag in the months ahead, this is expected to more than offset the export boost from higher commodity prices, trimming the trade surplus further," Porter said.

In a separate release on Tuesday, Statscan said the price of new homes in Canada rose 0.6 percent in January from December, the second straight monthly increase after 16 months of declines.

New home prices rose 6.5 percent in the year to January, up from an annual pace of 6.2 percent in December.

The increase beat expectations of analysts in a Reuters poll who had forecast, on average, an increase of 0.3 percent in the month. (Reporting by Louise Egan, editing by Mario Di Simine)