CANADA FX DEBT-C$ climbs amid NAFTA optimism, as stocks steady

    * Canadian dollar at C$1.2852, or 77.81 U.S. cents
    * Loonie touches its strongest since March 27 at C$1.2829
    * Bond prices lower across the yield curve

    TORONTO, April 3 (Reuters) - The Canadian dollar
strengthened to a one-week high against its U.S. counterpart on
Tuesday as oil and stock prices steadied after steep declines
the day before, while investors weighed potential progress
toward a NAFTA trade deal. 
    The United States, Mexico and Canada have made significant
advances on reworking the North American Free Trade Agreement
and ministers will meet in the coming days to determine the
scope to agree on the basics of a deal, Mexico's economy
minister said on Monday.             
    U.S. stocks were boosted by gains in beaten-down technology
    Canada's commodity-linked currency tends to be sensitive to
movement in stock prices which are influenced by the health of
the global economy.
    The price of oil, one of Canada's major exports, rose after
its biggest one-day fall in almost a year the previous day,
although higher Russian output and Saudi Arabia possibly cutting
its selling prices acted as a drag.             
    U.S. crude        prices were up 0.4 percent at $63.24 a
    At 9:16 a.m. EDT (1316 GMT), the Canadian dollar         
was trading 0.5 percent higher at C$1.2852 to the greenback, or
77.81 U.S. cents.
    The currency's weakest level of the session was C$1.2924,
while it touched its strongest since March 27 at C$1.2829.    
    Fiscal stimulus from major provinces is set to give Canada's
economy a shot in the arm, which could boost the case for
further Bank of Canada interest rate hikes over the coming
months despite slow growth at the start of the year, economists
said on Monday.             
    Canadian government bond prices were lower across the yield
curve in sympathy with U.S. Treasuries as demand faded for
safe-haven assets.
    The two-year            fell 1.7 Canadian cents to yield
1.787 percent and the 10-year             declined 10 Canadian
cents to yield 2.127 percent.
    On Friday, the 10-year yield touched its lowest intraday
since Jan. 4 at 2.073 percent.
    Canadian trade data for February is due on Thursday and the
March employment report is due on Friday.

 (Reporting by Fergal Smith; Editing by Bernadette Baum)