UPDATE 1-Canada's Q2 current account deficit narrows slightly

Thu Aug 28, 2014 8:40am EDT

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(Adds details of release, background)

OTTAWA Aug 28 (Reuters) - Canada's current account deficit in the second quarter narrowed slightly to C$11.87 billion ($10.89 billion) on stronger investment income, Statistics Canada said on Thursday.

Market analysts had expected a shortfall of C$11.80 billion. Statscan revised the first-quarter deficit to C$12.03 billion from an initial C$12.39 billion.

The deficit on cross-border investment income flows shrank to C$5.80 billion from C$6.27 billion in the first quarter, as profits of Canadian direct investors on their operations abroad grew by C$370 million.

The balance on international trade in goods posted a surplus of C$1.66 billion, down from C$1.78 billion in the first quarter. Exporters have for long struggled with weak markets and a strong Canadian dollar but are showing signs of recovery.

Total exports rose by 3.0 percent to hit a record C$132.35 billion on higher shipments of motor vehicles and parts, grains and forestry products. Exports of energy products - which accounted for 25.4 percent of all exports in the second quarter - fell by 3.5 percent to C$33.64 billion.

Total imports rose by 3.2 percent to C$130.72 billion on greater imports of motor vehicles and parts, consumer goods and chemical plastic and rubber products.

($1=$1.09 Canadian) (Reporting by David Ljunggren; Editing by Paul Simao)