* Canadian dollar rises 0.2 percent against the greenback * Loonie notches biggest gain among G10 currencies * C$ touches its strongest level since Feb. 6 at 1.3171 * Canadian bond prices trade mixed across a steeper yield curve TORONTO, Feb 20 (Reuters) - The Canadian dollar strengthened on Wednesday to its highest in two weeks against the greenback, posting the biggest rise among its peers, as global stocks were boosted by hopes of progress in trade talks between the United States and China. World stocks notched a four-month high on U.S.-China trade talks optimism, with a dovish backdrop at major central banks also helping push markets back into the black. Canada is a major producer of commodities, including oil, so its economy could benefit from improved prospects for global trade. U.S. crude oil futures were down 0.1 percent at $56.05 a barrel on Wednesday, after the U.S. government said shale output would rise to a record next month. Still, oil has rallied more than 30 percent since hitting an 18-month low in December. Data on Tuesday from the U.S. Commodity Futures Trading Commission and Reuters calculations showed speculators had nudged up bearish bets on the Canadian dollar. As of Jan. 29, net short positions had increased to 56,390 contracts from 56,096 in the prior week. At 10:05 a.m. (1505 GMT), the Canadian dollar was trading 0.2 percent higher at 1.3181 to the greenback, or 75.87 U.S. cents, the biggest gain of G10 currencies. The currency touched its strongest intraday level since Feb. 6 at 1.3171. Gains for the loonie came as Canada's oil-producing province of Alberta said it has leased 4,400 rail cars in a multibillion-dollar move to clear a glut of crude that depressed prices. The Bank of Canada said last month it expects investment in the energy sector to contract because of low oil prices and production curtailments in Alberta. Bank of Canada Governor Stephen Poloz is due to speak on monetary policy on Thursday, while Canadian retail sales data for December is due on Friday. Canadian government bond prices were mixed across a steeper yield curve in sympathy with U.S. Treasuries. The two-year rose 0.5 Canadian cents to yield 1.771 percent and the 10-year declined 6 Canadian cents to yield 1.897 percent. (Reporting by Fergal Smith; Editing by David Gregorio)
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