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CANADA FX DEBT-C$ firms amid hopes of easing in China-U.S. trade war

    * Canadian dollar rises 0.1 percent against the greenback
    * Price of U.S. oil rises 2.2 percent
    * Canadian bond prices dip across a flatter yield curve
    * Gap between 2- and 10-year yields narrows to 3.9 basis

    TORONTO, Dec 11 (Reuters) - The Canadian dollar edged higher
against its U.S. counterpart on Tuesday as oil prices and stocks
rose amid hopes of an easing  in the China-U.S. trade war.
    Stocks rose after a report China is moving to cut import
tariffs on American-made cars was interpreted by the market as a
sign China is ready to make concessions on trade, offsetting
heightened uncertainty over Brexit.             
    Canada is a major exporter of commodities, including oil,
and runs a current account deficit so its economy could benefit
from an improved outlook for the global flow of trade or
    The price of oil recouped much of the previous day's hefty
losses as a modest show of strength in global stocks, a slightly
weaker U.S. dollar and an unplanned supply outage in OPEC member
Libya lent support.             
    U.S. crude        prices were up 2.2 percent at $52.10 a
    At 9:25 a.m. (1425 GMT), the Canadian dollar          was
trading 0.1 percent higher at 1.3389 to the greenback, or 74.69
U.S. cents. The currency traded in a range of 1.3379 to 1.3421.
    Last Thursday, the currency touched its weakest level in
nearly 18 months at 1.3445 after the Bank of Canada suggested
the pace of future interest rate hikes could be more gradual.
    Speculators have added to their bearish bets on the Canadian
dollar for the fourth straight week, data from the U.S.
Commodity Futures Trading Commission and Reuters calculations
showed on Monday. As of Dec. 4, net short positions had
increased to 12,936 contracts from 8,630 a week earlier.
    Canadian government bond prices were lower across the yield
curve, with the two-year            down 3.5 Canadian cents to
yield 2.032 percent and the 10-year             falling 10
Canadian cents to yield 2.071 percent.
    The gap between Canada's 2- and 10-year yields narrowed by
0.8 basis points to a spread of 3.9 basis points, its narrowest
since September 2007.         

 (Reporting by Fergal Smith
Editing by Frances Kerry)