CANADA FX DEBT-C$ firms as stocks rally; BoC rate decision awaited

    * Canadian dollar rises 0.1% against the greenback
    * Canada posts a C$1.12 billion trade deficit in July
    * Price of U.S. oil increases 2.2%
    * Canadian bond prices fall across the yield curve

    TORONTO, Sept 4 (Reuters) - The Canadian dollar rose against
the greenback on Wednesday as investor risk appetite improved,
but the currency's gains were modest ahead of a Bank of Canada
interest rate decision and after domestic data showed a
wider-than-expected trade deficit.
    At 8:40 a.m. (1240 GMT), the Canadian dollar          was
trading 0.1% higher at 1.3323 to the greenback, or 75.06 U.S.
cents. The currency, which hit on Tuesday its weakest intraday
level in two-and-a-half months at 1.3382, traded in a range of
1.3314 to 1.3343.
    Canada posted a trade deficit of C$1.12 billion in July as
imports rose and exports declined, Statistics Canada said.
Analysts had forecast a deficit of C$0.40 billion.             
    Separate data showed that Canadian labor productivity grew
by 0.2% in the second quarter.                 
    Meanwhile, money markets expect the Bank of Canada to leave
its benchmark interest rate on hold at 1.75%, when it announces
its decision at 10 a.m. (1400 GMT), but to ease by the end of
the year. The central bank has worried about the risks trade
wars pose to the global economy.           
    Stocks          rose globally on Wednesday after encouraging
data from China reduced concerns of slowing global growth and as
UK lawmakers sought to prevent a no-deal Brexit.
    Canada exports many commodities, including oil, so its
economy could benefit from an improved outlook for the global
    U.S. crude oil futures        prices were up 2.2% at $55.11
a barrel.              
    Canadian government bond prices were lower across the yield
curve, with the two-year            down 1.5 Canadian cents to
yield 1.324% and the 10-year             falling 26 Canadian
cents to yield 1.141%.

 (Reporting by Fergal Smith; Editing by Steve Orlofsky)