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* C$ firms to C$0.9929 vs US$, or $1.0072
* Bond prices rally with US Treasuries
* Canada reports trade surplus of C$3 billion (Updates after Canada, US trade data)
By Claire Sibonney
TORONTO, Feb 11 (Reuters) - The Canadian dollar climbed to a session high against its U.S. counterpart on Friday after monthly trade data dramatically beat expectations as the country returned to a trade surplus.
Soaring exports of crude oil and other energy products unexpectedly tipped Canada's trade balance into the black in December -- to C$3 billion -- after nine months of deficits, fueling hopes the much-coveted export recovery is gaining traction. For more see [ID:nN11157853].
Economists in a Reuters survey had predicted the country's trade deficit to widen to C$350 million.
The Canadian currency CAD=D4 firmed as high as C$0.9929 to the U.S. dollar, or $1.0072, up from around C$0.9958 to the U.S. dollar, or $1.0042 immediately before the release.
"The Canadian dollar certainly got a good lift from the Canadian trade report ... A 10 percent jump in exports in a month will do that," said Sal Guatieri, senior economist at BMO Capital Markets.
"It suggests our economy is benefiting tremendously from the commodities boom, not just because of rising resource prices but because of strong global demand for resources."
Guatieri said the surprise figure may prompt the Bank of Canada to resume hiking interest rates sooner rather than later. [CA/POLL]
"It's quite possible that the economy is growing a little faster than the Bank of Canada anticipated and as a result, there is a risk it could resume raising interest rates before the summer," he said.
At 9:15 a.m. (1415 GMT), the Canadian dollar CAD=D4 was at C$0.9948 to the U.S. dollar, or $1.0052, up from Thursday's North American session at C$0.9958 to the U.S. dollar, or $1.0042.
Prior to the data, the currency was nearly perfectly flat compared to Thursday's close, against a risk-off backdrop partly on growing tensions in Egypt after President Hosni Mubarak disappointed protesters hoping he would resign.
Helping to support the Canadian dollar however, were higher oil prices resulting from supply concerns in the Mideast, as well as broad strength of the greenback, which can tend to rub off on other North American currencies. [O/R] [FRX/]
Michael O'Neill, managing director at Knightsbridge Foreign Exchange, said the currency was still consolidating in a C$0.9830 to C$1.0010 range.
Despite the healthy domestic data, Canadian government bond prices also rallied, tracking U.S. Treasuries, as geopolitical fears in Egypt and a wider trade deficit in the United States attracted some flows into safe-haven assets. [US/]
The two-year Canadian government bond CA2YT=RR rose 6 Canadian cents to yield 1.849 percent, while the 10-year bond CA10YT=RR advanced 27 Canadian cents to yield 3.434 percent. (Additional reporting by Ka Yan Ng; Editing by James Dalgleish)