* Canadian dollar rises 0.2% against the greenback * Canada's annual inflation rate rises to 2.4% in January * Price of U.S. oil increases 1.4% * Canadian bond yields rise across a steeper yield curve By Fergal Smith TORONTO, Feb 19 (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Wednesday as hopes that China would stimulate its economy raised investor sentiment and domestic data showed inflation climbed in January. At 10:04 a.m. (1504 GMT), the Canadian dollar was trading 0.2% higher at 1.3232 to the greenback, or 75.57 U.S. cents. The currency traded in a range of 1.3216 to 1.3265. A decline in the number of new coronavirus cases in China and mounting expectations for more policy stimulus boosted global equity markets. Canada is a major exporter of commodities, including oil, so its economy could benefit from improved prospects for economic growth. U.S. crude oil futures were up 1.4% at $52.79 a barrel after demand worries eased with a slowing of coronavirus cases in China and supply was curtailed by a U.S. move to cut more Venezuelan crude from the market. Canada's annual inflation rate rose to 2.4% in January on higher gasoline prices, Statistics Canada said. Some analysts suggested the data may pose a challenge for the Bank of Canada should it wish to ease rates, although the average of three key measures of underlying inflation dipped to 2%, the central bank's target. Chances of an interest rate cut in April fell to less than 40% from nearly 50% before the data, the overnight index swaps market indicated. Canadian bond yields rose across a steeper yield curve, with the 10-year yield up 3.2 basis points at 1.361%. (Reporting by Fergal Smith; Editing by David Gregorio)
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