UPDATE 2-Energy prices boost Canada trade surplus in June

(Adds details, analyst comments, market reaction)

By Louise Egan

OTTAWA, Aug 12 (Reuters) - A surge in oil exports to the United States boosted Canada's trade surplus in June, boding well for an economy that is narrowly skirting a recession.

The trade surplus widened for a second straight month in June to C$5.8 billion ($5.4 billion), in line with expectations, and up from C$5.22 billion in May, Statistics Canada said on Tuesday.

The improvement came thanks to an 11.5-percent jump in exports of energy products worldwide and a 3.1 percent jump in total exports. However, the gain was entirely due to the commodity price boom as export volumes actually fell.

"On balance, while the headline trade surplus appears healthy, the underlying real pace of exports does not suggest much strength in trade," said Charmaine Buskas, senior economics strategist at TD Securities.

"But the exact impact on GDP (gross domestic product) might not be as weak as one would expect since manufacturing exports were so strong in June," she said.

The upbeat trade report helped the Canadian dollar regain some lost ground and add 0.6 percent against the U.S. dollar, which was hurt by profit-taking after a five-day rally.

"Fundamentally, the stronger trade surplus opens the door on a pick-up for June GDP. May's 0.1 percent GDP contraction has set the bar pretty low with regards to market expectations for Canadian economic growth," said Stewart Hall, market strategist at HSBC Canada.

Canada's economy shrank in the first quarter, then rebounded in April, only to contract again in May.

A recession is technically defined as two consecutive quarters of economic contraction.

In contrast to the United States, net exports in Canada have put downward pressure on economic growth while consumer spending is the biggest contributor.

SURPLUS TO U.S. WIDENS

Total exports to the United States, Canada's top trading partner, grew 5.3 percent, with about half that increase made up by crude petroleum shipments, Statscan analysts said.

The surplus with the United States widened for the first time since March after exports jumped 5.3 percent to C$32.8 billion, but was still a long way from a peak of C$33.5 billion recorded in October 2005.

Exports to countries other than the United States declined in June from a record high in May, increasing the trade deficit with these countries as a result.

Surprisingly, automotive exports rebounded in June after a three-month losing streak, gaining 7.7 percent even though sales of passenger vehicles stayed well below 2007 levels.

Shipments of industrial goods and materials also increased 2.1 percent, largely due to Chinese demand for fertilizer.

Strong energy prices buoyed imports, which grew 2 percent on the back of an 18-percent jump in energy product imports. ($1=$1.07 Canadian) (Reporting by Louise Egan; Editing by Bernadette Baum)