CANADA FX DEBT-C$ rises to a 4-week high as oil rallies

* Canadian dollar at C$1.3877 or 72.06 U.S. cents
    * Currency touches its strongest level since Jan. 4 at
    * Bond prices lower across the maturity curve

    By Fergal Smith
    TORONTO, Feb 3 (Reuters) - The Canadian dollar rallied to a
4-week high against its U.S. counterpart on Wednesday as oil
prices bounced and after the takeover of a major Canadian
retailer was announced, while doubts about U.S. rates hikes
weighed on the greenback.
    U.S. crude prices rose 3 percent after Russia
reiterated its openness to talking with OPEC about output cuts.
    U.S. home improvement retailer Lowe's Companies Inc 
said it agreed to buy Canada's Rona Inc in a deal
valued at C$3.2 billion ($2.28 billion). 
    Dealers doubted that foreign exchange flows related to the
deal had driven the Canadian dollar higher overnight. But
expectation that flows might occur was supportive of the
    "It could be market participants thinking that they might
front run that (takeover related flows)," said Brad Schruder,
director of foreign exchange at BMO Capital Markets.
    At 9:37 a.m. EST (1437 GMT), the Canadian dollar 
was trading at C$1.3877 to the greenback, or 72.06 U.S. cents,
much stronger than the Bank of Canada's official close of
C$1.4027, or 71.29 U.S. cents.
    The currency's touched its strongest level since Jan. 4 at
C$1.3838, while its weakest level was C$1.4103.
    U.S. private employers added more jobs than expected in
January. Nonetheless, the U.S. dollar weakened
against a basket of major currencies amid doubts about how much
the Federal Reserve can raise rates this year. 
    Most automakers on Tuesday reported higher Canadian auto
sales in January, even as forecasters expect demand for cars and
light trucks to level off in Canada this year following a
record-breaking 2015. 
    Canadian government bond prices were lower across the
maturity curve, with the two-year price down 5
Canadian cents to yield 0.399 percent and the benchmark 10-year
 falling 38 Canadian cents to yield 1.159 percent.
    The 10-year yield hit its lowest since Jan. 20 at 1.108
percent before rebounding. It followed a flight to safety which
helped drive yields lower on Tuesday.
    The Bank of Canada will conduct a C$3.7 billion 2-year
auction on behalf of the Government of Canada. The bidding
deadline is 12:00 p.m. EST (1700 GMT).

 (Reporting by Fergal Smith; Editing by Nick Zieminski)