(Adds dealer quotes and details throughout, updates prices) * Canadian dollar rises 0.4% against the greenback * Loonie touches its strongest level since April 15 at 1.3936 * Price of U.S. oil decreases 1.1% * Canadian bond yields fall across a flatter curve By Fergal Smith TORONTO, April 28 (Reuters) - The Canadian dollar strengthened to a near two-week high against its U.S. counterpart on Tuesday as the prospect of looser social-distancing restrictions in a number of major economies supported risk appetite. World stocks rose, riding out sharp swings on Wall Street as experts issued new warnings against reopening economies too soon. Canada runs a current account deficit and is a major exporter of commodities, including oil, so the loonie tends to be sensitive to the global flow of trade and capital. "I think the overall theme that's driving the Canadian dollar is risk sentiment," said Rahim Madhavji, president at KnightsbridgeFX.com. "The loonie is rising despite the headwinds that we are going to see in Canada with low oil, the economy not opening up as quickly as the United States." Prime Minister Justin Trudeau said Ottawa and the provinces would soon release guidelines on returning to normal, stressing there had to be enough capacity to test and trace the coronavirus to control any new spread. The Canadian dollar was trading 0.4% higher at 1.3977 to the greenback, or 71.55 U.S. cents. The currency touched its strongest intraday level since April 15 at 1.3936. The Canadian economy is likely in its deepest recession on record and will only recover modestly over the coming year as it takes a direct hit from the coronavirus outbreak and a collapse in oil prices, a Reuters poll of economists showed. To cushion the economic impact of the outbreak, Ottawa is rolling out more than C$100 billion in direct aid and the Bank of Canada has slashed interest rates to near zero and begun buying government debt. The next governor of the Bank of Canada has room to make an immediate impact on monetary policy, economists say, as the central bank's response to the coronavirus crisis likely shifts from financial market support to boosting economic recovery. U.S. crude oil futures were down 1.1% at 12.64 a barrel as domestic stockpiles were expected to have risen closer to record highs amid tightening storage despite plans to cut production during the COVID-19 pandemic. Canadian government bond yields fell across a flatter curve. The 10-year yield was down 4.8 basis points at 0.572%. (Reporting by Fergal Smith; Editing by Alistair Bell and Peter Cooney)
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