CANADA FX DEBT-C$ rises on trade deal optimism, beats peers in January

 (Adds strategist quotes and details throughout; updates prices)
    * Canadian gains 0.2 percent against the greenback
    * Loonie climbs 4 percent in January
    * Canadian GDP falls 0.1 percent in November
    * Price of U.S. oil falls 0.8 percent
    * Canadian bond prices rise across the yield curve

    By Fergal Smith
    TORONTO, Jan 31 (Reuters) - The Canadian dollar, which
outperformed its peers this month, firmed against the greenback
on Thursday as hopes of progress on trade talks between the
United States and China offset data showing a domestic economic
    U.S. President Donald Trump said China wanted to strike a
deal by March 1 to avoid tariff increases and that he thought he
could get one, but it may not be totally fleshed out in writing
by then.             
    "I think the deal is not closed but at least the tone has
been positive and that has helped the commodity currencies for
the most part," said Alfonso Esparza, a senior currency analyst
    Canada is running a current account deficit and exports many
commodities, including oil, so its economy could benefit from a
pickup in the global flow of trade or capital.
    Canada's gross domestic product fell by 0.1 percent in
November from October, matching estimates, on declines in the
wholesale trade sector, as well as finance and insurance,
Statistics Canada said.             
    Still, the Bank of Canada has said interest rates will need
to rise further over time in order to achieve its inflation
    "I don't think the Bank of Canada needs to tweak its
monetary policy or its tightening bias considerably as opposed
to what we have seen with the Fed," Esparza said
    On Thursday, the Federal Reserve signaled a potential end to
its interest rate hike cycle.                     
    Stubbornly low wage growth in Canada should start picking up
later this year as the economy overcomes a slowdown caused by
weak oil prices and housing market softness, Carolyn Wilkins, a
senior deputy governor at the Bank of Canada, said on Thursday.
    At 4:28 p.m. (2128 GMT), the Canadian dollar          was
trading 0.2 percent higher at 1.3126 to the greenback, or 76.18
U.S. cents. The currency, which on Wednesday touched its
strongest level in more than two months at 1.3119, traded in a
range of 1.3121 to 1.3166.
    For the month, the loonie advanced 4 percent, the best
performance among G10 currencies, helped by a rebound in oil
prices. It declined 7.8 percent in 2018.
    U.S. crude oil futures        touched a two-month high on
Thursday before settling 0.8 percent lower at $53.79 a barrel.
    Canadian government bond prices were higher across the yield
curve in sympathy with U.S. Treasuries, with the 10-year
            rising 29 Canadian cents to yield 1.879 percent.

 (Reporting by Fergal Smith; Editing by Bernadette Baum and
Peter Cooney)