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(Correct in bullet and last paragraph to show bond yields lower, not higher, across curve)
* Canadian dollar at C$1.0711, or 93.36 U.S. cents
* Trade deficit widens in November, October data revised lower
* Bond yields slightly lower across curve
By Alastair Sharp
TORONTO, Jan 7 (Reuters) - The Canadian dollar hit a one-week low against its U.S. counterpart on Tuesday after Canada posted a much-larger- than-expected trade deficit, knocking market hopes that the beleaguered export sector might be starting to recover.
The November deficit and a sharp downward revision to October's numbers knocked the wind from a nascent growth spurt for the Canadian economy.
"There was some hope late last year that exports showed some pick-up, especially in September, but with the revision to October and again the weaker number in November, it showed that it was probably just one-off strength in September," said Charles St-Arnaud, Canadian economist and currency strategist at Nomura Securities International in New York.
"It doesn't provide positive momentum going into this year," he added.
The weak domestic data contrasted with the U.S. trade deficit hitting its lowest in four year in November as exports hit a record high.
The United States is Canada's main trading partner, with about three-quarters of Canada's exports going to its southern neighbor.
The loonie, as Canada's currency is colloquially known, spiked to C$1.0719, or 93.29 U.S. cents shortly after the data was released and later hit C$1.0720. That was its weakest since Dec. 30. It last traded at C$1.0711, or 93.36 U.S. cents.
St-Arnaud said there is a 30 percent probability the Bank of Canada cuts interest rates in the next six months if economic growth slows further and inflation remains below the central bank's target.
Overnight index swaps, which trade based on expectations for the policy rate, are not forecasting a change in rates in the next 12 months.
Yields on Canadian government debt were lower across the maturity curve, with the price of the two-year bond up half a Canadian cent to yield 1.129 percent, while the benchmark 10-year bond's price rose 3 Canadian cents to yield 2.713 percent. (Reporting by Alastair Sharp; Editing by James Dalgleish)