* Canadian dollar at C$1.2947, or 77.24 U.S. cents
* Loonie touches its strongest since May 31 at C$1.2857
* Canada's trade deficit shrinks to six-month low
* Bond prices lower across yield curve
By Fergal Smith
TORONTO, June 6 (Reuters) - The Canadian dollar strengthened to a near one-week high against its U.S. counterpart on Wednesday as domestic data showed a narrower-than-expected trade deficit but some gains were pared ahead of this week's G7 summit.
Canada's trade deficit in April shrank to a six-month low of C$1.90 billion from C$3.93 billion in March, as exports climbed to a record high and imports dropped, Statistics Canada said. The shortfall was considerably less than the C$3.40 billion deficit forecast by analysts. 3:40 p.m. EDT (1940 GMT), the Canadian dollar CAD=D4 was trading 0.2 percent higher at C$1.2947 to the greenback, or 77.24 U.S. cents.
The loonie touched its strongest since May 31 at C$1.2857 but pared its gains.
"I think there is some uncertainty as regards trade you can pin that on, especially given the fact that we do have an important G7 summit coming up this weekend," said Bipan Rai, North America Head of FX Strategy at CIBC Capital Markets.
Top U.S. allies are set for a showdown with Washington at this week's G7 summit in Canada as the Trump administration shows no sign of backing down from protectionist policies that have upset trading partners and unnerved investors. U.S. dollar fell against a basket of major currencies .DXY after officials said the European Central Bank could wind down its stimulus program by end-2018, boosting the euro. price of oil, one of Canada's major exports, fell even after Venezuela raised the prospect of a halt to some crude exports. crude oil futures CLc1 settled 1.2 percent lower at $64.73 a barrel.
Canadian government bond prices were lower across the yield curve in sympathy with U.S. Treasuries and German Bunds. The two-year CA2YT=RR fell 5 Canadian cents to yield 1.944 percent and the 10-year CA10YT=RR declined 52 Canadian cents to yield 2.312 percent.
The value of Canadian building permits fell 4.6 percent in April from March, the biggest drop in five months. Canada's employment report for May is due on Friday.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ WRAPUP 1-Canadian exports shrug off trade uncertainty to hit record high
UPDATE 1-Canada building permits sink by most in five months in April