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* Canadian dollar strengthens 0.3% against the greenback * Trades in a range of 1.2833 to 1.2891 * Price of U.S. oil increases 0.2% * Canadian bond yields rise across curve TORONTO, Aug 3 (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Wednesday as risk appetite showed signs of recovery and ahead of key domestic data later in the week. World stocks stabilized after they were pressured on Tuesday by increasing tensions between the United States and China as well as hawkish comments from Federal Reserve officials. Canada is a major producer of commodities, including oil, so the loonie tends to be sensitive to shifts in risk appetite. Oil prices rose in volatile trading as the OPEC+ producer group was set for a small output increase of 100,000 barrels per day, a document seen by Reuters showed, dashing U.S. hopes of a meaningful supply boost. U.S. crude prices were up 0.2% at $94.60 a barrel, while the Canadian dollar gained 0.3% to 1.2841 per greenback, or 77.88 U.S. cents. The currency traded in a range of 1.2833 to 1.2891. Canadian trade data for June is due on Thursday and the July employment report is set for Friday, which could offer clues on the strength of the domestic economy. Money markets expect the Bank of Canada to hike its benchmark interest rate by a further 50 basis points next month to a level of 3%. That is the top of the so-called neutral range at which monetary policy neither stimulates nor weighs on the economy. Canadian government bond yields were higher across a more deeply inverted curve. The 2-year rose 8.3 basis points to 3.193%, while the 10-year was up 4.1 basis points at 2.750%. (Reporting by Fergal Smith Editing by Bernadette Baum)