C$ strengthens as trade surplus hits widest in 14 years



* Canadian dollar strengthens 0.2% against the greenback

* Trades in a range of 1.2981 to 1.3055

* Canada's trade surplus widens to C$5.3 billion in May

* Price of U.S. oil rises 2.5%

TORONTO, July 7 (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Thursday as oil prices rebounded and data showed Canada posting its widest trade surplus since August 2008.

Canada's trade surplus widened to C$5.3 billion ($4.1 billion) in May, as higher prices for energy products boosted exports and imports decreased.

The price of oil, one of Canada's major exports, rose after steep losses in the previous two sessions, as investors returned their focus to tight supply.

U.S. crude CLc1 prices rose 2.5% to $100.98 a barrel, while the Canadian dollar CAD= was trading 0.2% higher at 1.3016 to the greenback, or 76.83 U.S. cents. It traded in a range of 1.2981 to 1.3055.

Gains for the loonie came as the U.S. dollar .DXY gave back some recent gains against a basket of major currencies and gains in chipmakers lifted stocks.

That helped calm investors after hawkish Federal Reserve comments increased the likelihood of a hefty interest rate hike later this month and raised fears over how much this could slow the economy.

The Canadian dollar will gain less ground than previously thought over the coming year as the growing risk of a global economic slowdown bolsters demand for safe-haven currencies such as the U.S. dollar, a Reuters poll showed.

Canadian government bond yields were mixed across a flatter curve, with the 10-year CA10YT=RR down nearly one basis point at 3.183%.

The Bank of Canada is due to auction C$3 billion of 10-year bonds on behalf of Canada's government. The bidding deadline is at 12 p.m. ET (1600 GMT).

Canada's employment report for June, due on Friday, could help guide expectations for a supersized interest rate hike next week by the central bank.
Reporting by Fergal Smith; editing by Jonathan Oatis

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