CANADA FX DEBT-Canadian dollar rises, yearly gain of 5% tops G10 currencies

a thaw in the prolonged U.S.-China trade row and Middle East

* Canadian dollar rises 0.5% against the greenback

* Loonie notches 14-month high at 1.2993

* Price of U.S. oil falls 1%

* Canadian bond prices dip across the yield curve

TORONTO, Dec 31 (Reuters) - The Canadian dollar strengthened to a 14-month high against its U.S. counterpart on Tuesday as data from China supported the view that the global economy is recovering, pushing the loonie's annual rally to 5%, the biggest of any G10 currency.

trading 0.5% higher at 1.3000 to the greenback, or 76.92 U.S. cents. The currency notched its strongest intraday level since Oct. 24, 2018 at 1.2993. Manufacturing activity in China expanded for a second straight month in December as seasonal demand and signs of progress in trade talks with Washington boosted factories' output and order books. On Monday, the White House's trade adviser said the U.S.-China Phase 1 trade deal would likely be signed in the next week. Canada is a major exporter of commodities, including oil, so its economy could benefit from a pick up in global growth. Despite the loonie's 5% advance this year, it has slumped 19% since the start of the decade, hit when oil prices plunged in 2014.

barrel but were on track for monthly and annual gains, supported unrest. Canadian government bond prices edged lower across the yield

cents to yield 1.653%. The 10-year yield has fallen about 31 basis points since the start of 2019. Canada's bond market is due to close early ahead of the New Year's Day holiday on Wednesday.

(Reporting by Fergal Smith; Editing by David Gregorio)