CANADA FX DEBT-C$ posts 7-week high as oil climbs on ebbing trade tensions

 (Adds strategist quotes and details on market activity; updates
    * Canadian dollar at C$1.2607, or 79.32 U.S. cents
    * Loonie touches its strongest since Feb. 20 at C$1.2588
    * The price of oil rises 3.3 percent
    * Bond prices lower across the yield curve

    By Fergal Smith
    TORONTO, April 10 (Reuters) - The Canadian dollar
strengthened to a seven-week high against its U.S. counterpart
on Tuesday as higher oil and stock prices signaled easing
investor concerns about an escalating U.S.-China trade row.
    Investor optimism grew that a trade dispute between the
United States and China might be resolved without greater damage
to the global economy after President Xi Jinping promised to
open China's economy further and lower import tariffs on
products including cars.             
    "The market is anticipating a pause in the trade war and
that has led to a rally in the Canadian dollar and anything else
that is trade sensitive," said Adam Button, currency analyst at
ForexLive in Montreal.
    U.S. crude oil futures        settled 3.3 percent higher at
$65.51 a barrel, building on Monday's rally.             
    At 4 p.m. EDT (2000 GMT), the Canadian dollar          was
trading 0.7 percent higher at C$1.2607 to the greenback, or
79.32 U.S. cents. The currency touched its strongest level since
Feb. 20 at C$1.2588.    
    Gains for the loonie came after the Bank of Canada said in a
report on Monday that Canadian companies remained optimistic
about sales growth despite trade uncertainties.
    "Everything has gone right for the Canadian dollar since the
start of the month and that continued today," Button said.
    Last week, stronger-than-expected domestic jobs data and
investor optimism over a deal to revamp the North American Free
Trade Agreement helped boost the loonie by 0.9 percent.
    Canadian government bond prices were lower across the yield
curve, with the two-year            down 5 Canadian cents to
yield 1.823 percent and the 10-year             falling 31
Canadian cents to yield 2.181 percent.
    The gap between Canada's 10-year yield and its U.S.
equivalent narrowed by 2.5 basis points to a spread of -62.0
basis points.
    Canadian housing starts slowed slightly in March and
building permits dipped in February, but overall residential
construction activity remained strong despite a housing
correction in some areas, separate reports showed.             

 (Reporting by Fergal Smith
Editing by Bernadette Baum and Phil Berlowitz)