* Canadian dollar snaps seven-session skid
* Trade data meets market expectations
* Bonds prices boosted by renewed credit concerns
By Frank Pingue
TORONTO, Aug 12 (Reuters) - The Canadian dollar finished higher against the U.S. dollar on Tuesday, snapping a seven-session losing skid as data showed Canada's trade surplus widened in June thanks to the commodity price boom.
Domestic bond prices finished higher across the curve as concerns about the U.S. financial crisis shook North American equities and triggered demand for more secure investments like government debt.
The Canadian dollar closed at C$1.0628 to the U.S. dollar, or 94.09 U.S. cents, up from C$1.0693 to the U.S. dollar, or 93.52 U.S. cents, at Monday's close.
The bulk of the currency's gains came early in the session and right after data showed Canada's trade surplus rose in June, a positive for an economy that has been flirting with a recession in recent months.
Another reason for the Canadian dollar's gain was a weaker U.S. dollar as the greenback's recent rally finally gave way profit-taking. Also, long-term bond yields moved slightly in favor of the Canadian dollar.
The Canadian currency's sudden rally surprised some experts since the domestic data was merely in line with expectations and came alongside a report that showed the U.S. trade deficit unexpectedly shrank in June.
"The Canadian data were good as well but my sense is they pretty well just met expectations, so it was a bit surprising that the Canadian dollar actually strengthened against the U.S. dollar after the two trade reports," said Sal Guatieri, senior economist at BMO Capital Markets.
"Plus, the U.S. trade report was exceptionally strong and I thought that would have given the U.S. dollar a good kick because it implies a fairly hefty upward revision to second-quarter GDP growth."
Despite the rally, the Canadian dollar is down considerably since it finally fell through a key technical level last week after having been stuck in a tight range around parity with the greenback since last November.
At one point in the session the Canadian dollar dropped to C$1.0699 to the U.S. dollar, or 93.47 U.S.. cents, which marked its lowest level since Aug. 17.
The latest economic data was unlikely to spark a dramatic turnaround in the Canadian dollar since it followed a number of key reports in recent weeks that have missed expectations and contributed to a slew of lowered forecasts for the currency.
"I guess in a relative sense we might see some improvement on the data front, which could support our currency," said Guatieri, "But our general sense is the Canadian dollar will likely weaken over the next year or so."
BOND PRICES RISE
Bond prices all finished higher given fresh credit worries after news late on Monday that said JPMorgan Chase & Co had been hurt by credit and mortgage market turmoil.
The bank said it had taken $1.5 billion in writedowns since July, which weighed on U.S. stocks, and to a lesser extent the Toronto Stock Exchange's main index, and convinced dealers to snap up less risky assets like debt.
"We saw safe-having buying in (bonds) because of credit market concerns following JP Morgan's writedown announcement," said Guatieri.
The two-year bond rose 4 Canadian cents to C$101.77 to yield 2.731 percent. The 10-year bond climbed 32 Canadian cents to C$105.33 to yield 3.599 percent.
The yield spread between the two-year and 10-year bond was 107 basis points, up from 105 basis points at the previous close.
The 30-year bond added 39 Canadian cent to C$116.39 for a yield of 4.032 percent. In the United States, the 30-year treasury yielded 4.544 percent.
The three-month when-issued T-bill yielded 2.50 percent, up from 2.49 percent at the previous close.