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CANADA FX DEBT-Canadian dollar notches 2-week high as China restrictions ease

       * Canadian dollar strengthens 0.8% against greenback
    * Loonie touches strongest level since May 5 at 1.2784
    * Canadian producer prices rise 0.8% in April
    * 10-year yield hits three-week low at 2.830%

    TORONTO, May 19 (Reuters) - The Canadian dollar strengthened
to its highest level in two weeks against its U.S. counterpart
on Thursday as China eased restrictions to contain the spread of
the coronavirus and the greenback broadly fell.
    The loonie        was trading 0.8% higher at 1.2790 to the
greenback, or 78.19 U.S. cents, after touching its strongest
level since May 5 at 1.2784. On Wednesday, the currency fell
0.6% as Wall Street tumbled.
    More Shanghai residents were given the freedom to shop for
groceries for the first time in nearly two months as authorities
set out more plans for exiting the city-wide COVID-19 lockdown
more fully.
    Investors have worried that lockdowns in China would slow
global economic growth. Canada is a major producer of
commodities, including oil, so the loonie is sensitive to the
outlook for the global economy.
    U.S. crude        prices were down 1.1% at $108.34 a barrel
as concerns that high fuel prices could hurt economic growth
offset the planned easing of restrictions in Shanghai.

    The safe-haven U.S. dollar        fell against a basket of
major currencies as the prospect of an aggressive near-term
tightening path by the European Central Bank boosted the euro
      .
    Meanwhile, data from Statistics Canada showed that Canadian
producer prices rose by 0.8% in April from March on higher
prices for energy and petroleum products. The annual rate of
increase was 16.4%.
    On Wednesday, data showed that consumer prices climbed 6.8%
on a year-over-year basis in April, supporting expectations for
a second straight half-percentage-point interest rate hike by
the Bank of Canada at its next policy decision on June 1.

    Canadian government bond yields were lower across the curve,
tracking the move in U.S. Treasuries. The 10-year
touched its lowest since April 28 at 2.830% before recovering to
2.862%, down 8.5 basis points on the day.

 (Reporting by Fergal Smith
Editing by Paul Simao)

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