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CANADA FX DEBT-C$ hits six-week high as trade tensions ebb, oil climbs

* Canadian dollar at C$1.2658, or 79.00 U.S. cents

* Loonie touches its strongest since Feb. 26 at C$1.2651

* The price of oil rises 1.8 percent

* Bond prices lower across the yield curve

TORONTO, April 10 (Reuters) - The Canadian dollar strengthened to a six-week high against its U.S. counterpart on Tuesday as higher oil and stock prices signaled easing investor concerns about an escalating U.S.-China trade row. Investor optimism grew that a trade dispute between the United States and China might be resolved without greater damage to the global economy after President Xi Jinping promised to open China's economy further and lower import tariffs on products including cars. Canada's commodity-linked economy could be hurt if global trade slows.

U.S. crude prices were up 1.8 percent to $64.55 a

barrel, building on Monday's rally. At 9:15 a.m. EDT (1315 GMT), the Canadian dollar was trading 0.3 percent higher at C$1.2658 to the greenback, or 79.00 U.S. cents. The currency touched its strongest level since Feb. 26 at C$1.2651. Gains for the loonie came after the Bank of Canada said in a report on Monday that Canadian companies remained optimistic about sales growth despite trade uncertainties. Last week, stronger-than-expected domestic jobs data and investor optimism over a deal to revamp the North American Free Trade Agreement helped boost the loonie by 0.9 percent. The Canadian government said it was considering all options on the Trans Mountain pipeline expansion, including a possible investment of public funds to ensure construction goes ahead.

Canadian government bond prices were lower across the yield

curve, with the two-year down 3.5 Canadian cents to yield 1.815 percent and the 10-year falling 27

Canadian cents to yield 2.176 percent. The gap between Canada's 10-year yield and its U.S. equivalent narrowed by 2.4 basis points to a spread of -62.1 basis points. The value of Canadian building permits dipped by 2.6 percent in February, in part due to lower construction intentions for single-family homes in Ontario, Statistics Canada said.

(Reporting by Fergal Smith; Editing by Bernadette Baum)