* C$ at C$0.9549 to the U.S. dollar, or $1.0472
* Canada trade surplus grows, US trade deficit widens
* Strong Canada dollar reflects confidence-Flaherty
* Bond prices cut losses across curve (Updates after trade data)
By Claire Sibonney
TORONTO, May 11 (Reuters) - The Canadian dollar rose against the U.S. currency on Wednesday morning after better-than-expected Canadian trade data and on talk of positive flows on the back of foreign acquisitions of Canadian companies.
Canada's trade surplus climbed to C$627 million in March after two months of decline as broad gains in exports outstripped higher imports. [ID:nN11150409]
A Reuters survey of analysts had predicted a C$500 million surplus.
By contrast, the U.S. trade deficit rose more than expected in March as exports leaped to a record high but imports rose nearly 5 percent as oil prices jumped. [ID:nCAT005430]
The Canadian currency was already on firmer ground heading into the trade reports, hitting a one-week high after breaking through a technical level.
"The Canadian trade data really provided minor support for the Canadian dollar," said Darren Richardson, senior corporate dealer at CanadianForex.
"The market is really focusing right now on some possible mergers and acquisitions to the positive for the Canadian dollar."
At 9:29 a.m. (1329 GMT), the Canadian dollar CAD=D4 was at C$0.9549 to the U.S. dollar, or $1.0472, up from Tuesday's North American session close of C$0.9577 to the U.S. dollar, or $1.0442. Earlier, it hit a high of C$0.9513 against the U.S. dollar, or $1.0512, its strongest level since May 4.
The currency climbed against the greenback overnight, pushing past the C$0.9570 area despite soft oil prices, which fell as Chinese inflation data signaled the world's second largest economy might be cooling. [O/R]
The price of U.S. oil is often a key driver for the Canadian dollar because of Canada's status as an oil exporter.
David Bradley, director of foreign exchange trading at Scotia Capital, also made note of the speculation in the market that there would be merger-and-acquisition related trades. He also pointed to interest from Asian central banks in the overnight session in buying commodity-linked currencies such as the Australian and Canadian dollars .
Longer-term, the Canadian dollar is still underpinned by strong fundamentals, he said.
Late on Tuesday, Finance Minister Jim Flaherty said Canada's strong currency reflects confidence in its economy, though sharp moves in its value are not welcome. He said he didn't want to see further U.S. dollar weakness and thought strong Canadian and U.S. currencies were both positive for the world. [ID:nN10140882]
Canadian bond prices were lower but off early lows.
The two-year Canadian government bond CA2YT=RR was off 1 Canadian cent to yield 1.731 percent, while the 10-year bond CA10YT=RR was down 3 Canadian cents to yield 3.270 percent.
Traders were monitoring mounting uncertainty over whether euro zone officials would provide timely financial aid to debt-laden Greece and Portugal. (Additional reporting by Ka Yan Ng; editing by Peter Galloway)