CANADA FX DEBT-C$ rebounds from 10-week low as trade fears dent greenback

    * Canadian dollar at C$1.2823, or 77.98 U.S. cents
    * Loonie touches weakest since Dec. 19 at C$1.2895
    * Bond prices higher across yield curve
    * 10-year yield touches six-week low at 2.170 percent

    By Fergal Smith
    TORONTO, March 1 (Reuters) - The Canadian dollar edged
higher against its U.S. counterpart on Thursday, recovering from
an earlier 10-week low as the greenback broadly fell and
investors weighed prospects of a more protectionist trade
    The dollar        turned lower against a basket of major
currencies on fears of an imminent trade war after President
Donald Trump said the United States would impose tariffs on
steel and aluminum.             
    Canada will retaliate if the United States imposes tariffs
on Canadian steel and aluminum products, Foreign Affairs
Minister Chrystia Freeland said.             
    "People are seeing Trump as being antagonistic toward
trade," said Colin Cieszynski, chief market strategist SIA
Wealth Management.
    The potential tariffs on steel and aluminum raises doubt
about U.S. willingness to come to "any reasonable deal" on
NAFTA, Cieszynski said.
    Trump has repeatedly threatened to walk away from the North
American Free Trade Agreement between the United States, Canada
and Mexico unless major changes are made. Canada sends about 75
percent of its exports to the United States.
    At 4 p.m. EST (2100 GMT), the Canadian dollar          was
trading 0.1 percent higher at C$1.2823 to the greenback, or
77.98 U.S. cents.
    The currency's strongest level of the session was C$1.2809,
while it touched its weakest since Dec. 19 at C$1.2895.
    The loonie posted in February its biggest monthly decline
since the Alberta wildfire, pressured by a Federal budget on
Tuesday that balked at a response to U.S. tax reform.
    Canada's current account deficit narrowed in the fourth
quarter as the country posted a smaller shortfall in the trade
of goods after three consecutive quarters of increases, data
from Statistics Canada showed.                      
    In domestic separate data, auto sales rose 2 percent in
February from a year earlier and a measure of manufacturing
business conditions declined.                         
    Figures for Canada's fourth-quarter economic growth will be
released on Friday, with analysts expecting the annualized rate
to come in below the Bank of Canada's 2.5 percent forecast.
    Canadian government bond prices were higher across the yield
curve in sympathy with U.S. Treasuries as stocks fell on Trump's
tariff plan, while Federal Reserve Chairman Jerome Powell told
U.S. lawmakers that there was scant evidence of the economy
    The 10-year             rose 46 Canadian cents to yield
2.176 percent. It touched its lowest intraday since Jan. 17 at
2.170 percent.

 (Reporting by Fergal Smith
Editing by Susan Thomas and Meredith Mazzilli)