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CANADA FX DEBT-Loonie firms as investors see Bank of Canada on hold

By Fergal Smith

(Adds strategist quotes and details on activity; updates prices) * Canadian dollar rises 0.1% against the greenback * Price of U.S. oil increases by 0.5% * Canadian bond prices rise across a flatter yield curve By Fergal Smith TORONTO, Dec 3 (Reuters) - The Canadian dollar edged higher against the greenback on Tuesday, as investors' worries about prospects for a trade deal between the United States and China were offset by bets that the Bank of Canada would leave interest rates on hold this week. Money markets see almost no chance of an interest rate cut by the central bank on Wednesday, after Governor Stephen Poloz said nearly two weeks ago that monetary conditions were about right given the current economic situation. Before Poloz's remarks, chances of a cut were about 25%. "One factor that has supported the Canadian dollar of late continues to be the chipping away of rate-cut expectations for the Bank of Canada," said Mark Chandler, head of Canadian fixed income and currency strategy at RBC Capital Markets. "The general risk-off tone has not though been very supportive, with equities taking the beating that they are taking today." "It seems to be those two factors that are at play for the currency and they are balancing themselves out pretty finely right now," Chandler said. Global stock markets fell after President Donald Trump said a trade agreement with China might have to wait until after the U.S. presidential election in November 2020, denting hopes of a resolution soon to a dispute that has weighed on the world economy. At 3:41 p.m. (2041 GMT), the Canadian dollar was trading 0.1% higher at 1.3294 to the greenback, or 75.22 U.S. cents. The currency traded in a range of 1.3283 to 1.3321. The price of oil, one of Canada's major exports, rose on expectations of output cuts from major producers. U.S. crude oil futures were up 0.5% at $56.25 a barrel. Canadian government bond prices were higher across a flatter yield curve in sympathy with U.S. Treasuries, on a flight to safety. The two-year rose 10.5 Canadian cents to yield 1.554% and the 10-year was up 78 Canadian cents to yield 1.449%. (Reporting by Fergal Smith; Editing by Jonathan Oatis and Peter Cooney)