* Canadian dollar at C$1.2886, or 77.60 U.S. cents
* Loonie gains for first time since Feb. 23
* Bond prices lower across yield curve
* Bank of Canada interest rate decision due on Wednesday
By Fergal Smith
TORONTO, March 6 (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Tuesday, breaking a string of six straight losing trading days, as investors turned their attention to a Bank of Canada interest rate decision onWednesday while fears on trade lingered.
At 4 p.m. EST (2100 GMT), the Canadian dollar CAD=D4 was trading 0.6 percent stronger at C$1.2886 to the greenback, or 77.60 U.S. cents, its first advance since Feb. 23.
The loonie traded in a range of C$1.2865 to C$1.2995. OnMonday, it touched its weakest since July 5 at C$1.3002.
"A lot depends on how the Bank of Canada characterizes theirview on the outlook tomorrow," said Eric Theoret, a currencystrategist at Scotiabank. "Ultimately, nothing fundamentally haschanged, with the exception of these potential threats."
U.S. President Donald Trump has appeared to tie possibleexemptions for Canada and Mexico from proposed tariffs on steeland aluminum to a "new" North American Free Trade Agreement aswell as other steps.
The Bank of Canada has said that uncertainty about thefuture of NAFTA is weighing increasingly on the outlook forCanada's economy.
The central bank has raised interest rates three times sinceJuly but is expected to leave its benchmark interest rate onhold at 1.25 percent on Wednesday.
The U.S. dollar index .DXY fell to a one-week low astraders piled back into riskier currencies after an agreementbetween North and South Korea to hold direct talks. price of oil CLc1 , one of Canada's major exports,edged higher and global stocks rose as Republican U.S. lawmakersstepped up calls for Trump to pull back from the proposed metalstariffs. O/R pace of purchasing activity in Canada picked up inFebruary, according to Ivey Purchasing Managers Index data. trade data for January is due on Wednesday and theFebruary employment report is due on Friday.
Canadian government bond prices were lower across the yieldcurve, with the two-year CA2YT=RR down 5 Canadian cents toyield 1.776 percent and the 10-year CA10YT=RR falling 30Canadian cents to yield 2.232 percent.
On Monday, the 10-year yield touched its lowest intraday innearly two months 2.145 percent.