CANADA FX DEBT-C$ weakens ahead of BoC decision as trade worries grow

    * Canadian dollar at C$1.2914, or 77.44 U.S. cents
    * Bond prices higher across the yield curve
    * Canada's trade deficit narrows to C$1.91 billion

    By Fergal Smith
    TORONTO, March 7 (Reuters) - The Canadian dollar weakened
against the greenback on Wednesday after the resignation of top
U.S. economic adviser Gary Cohn added to worries of a trade war,
but some losses were pared ahead of a Bank of Canada interest
rate decision.
    The central bank has raised interest rates three times since
July but is expected to leave its benchmark rate on hold at 1.25
percent on Wednesday, according to a Reuters poll.          
    "The economic data have softened and a number of
uncertainties suggest there's little reason to rush another
move," said Benjamin Reitzes, senior economist at BMO Capital
Markets in a research note.
    Canada's trade deficit narrowed more than expected to C$1.91
billion in January as imports pulled back from a record high,
but exports tumbled by the most in six months as the country
shipped fewer cars and forestry products, data from Statistics
Canada showed.                    
    The resignation of Cohn could give free trade skeptics the
upper hand in the White House.             
    Canada sends 75 percent of its exports to the United States.
Its economy could be hurt by planned U.S. tariffs on steel and
aluminum and by an uncertain outlook for the North American Free
Trade Agreement.
    At 8:58 a.m. EST (1358 GMT), the Canadian dollar         
was trading 0.3 percent lower at C$1.2914 to the greenback, or
77.44 U.S. cents.
    The currency's strongest level of the session was C$1.2876,
while its weakest level was C$1.2960. On Monday, the loonie
touched its weakest in eight months at C$1.3002.
    Still, the Canadian dollar is forecast to rally over the
coming year, a Reuters poll showed, as global economic strength
and a broadly weaker greenback offsets investor fears of a trade
    U.S. crude        prices were down 0.30 percent at $62.41 a
barrel. Oil is one of Canada's major exports.                 
    Canadian government bond prices were higher across the yield
curve in sympathy with U.S. Treasuries as global stocks fell.
    The two-year            rose 1.5 Canadian cents to yield
1.768 percent and the 10-year             gained 9 Canadian
cents to yield 2.221 percent.
    Canada's employment report for February is due on Friday.  

 (Reporting by Fergal Smith
Editing by Nick Zieminski)