* Canadian dollar rises 0.3% against the greenback
* Loonie notches an 8-day high intraday at 1.3269
* Price of U.S. oil increases 1.8%
* Canadian bond prices fall across a steeper yield curve
By Fergal Smith
TORONTO, Oct 10 (Reuters) - The Canadian dollar strengthened to a one-week high against its U.S. counterpart on Thursday, clawing back its earlier decline, as investors grew optimistic that top-level trade talks between the United States and China would yield at least a partial deal.
U.S. stocks rose after President Donald Trump tweeted he would meet Chinese Vice Premier Liu He on Friday for further trade talks. positive talks and potential outcomes always brings about a risk-on bias," said Darren Richardson, chief operating officer at Richardson International Currency Exchange Inc. "That always helps the Canadian dollar and oil strengthen across the board."
Canada is more dependent on trade than some other countries, such as the United States. At C$1.5 trillion, trade of goods and services, including exports of oil, accounted for 66% of Canada's economy in 2018, according to government data.
Oil prices rose, buoyed by comments by the head of OPEC that the organization could take action to balance oil markets and that it will decide in December on supply for next year. U.S. crude oil futures CLc1 settled 1.8% higher at $53.55 a barrel. U.S. dollar .DXY fell to two-week lows, with safe-haven demand for the currency waning as investors grew optimistic about a U.S.-China trade deal as well as a potential agreement on Britain's exit from the European Union. 3:34 p.m. Eastern time (1934 GMT), the Canadian dollar CAD=D4 was trading 0.3% higher at 1.3292 to the greenback, or 75.23 U.S. cents. The currency touched its strongest intraday level since Oct. 2 at 1.3269, while its weakest was a one-week low at 1.3346.
The gain for the loonie came as data from Statistics Canada showed new home prices rose 0.1% in August, the first increase since July 2018. employment report for September is due on Friday, which can help guide expectations for the Bank of Canada policy outlook.
Robust job gains this year have supported the central bank's decision to leave its benchmark interest rate on hold at 1.75% even as some of its peers, including the U.S. Federal Reserve and the European Central Bank, have reduced borrowing costs.
Canadian government bond prices were lower across a steeper yield curve in sympathy with U.S. Treasuries. The two-year CA2YT=RR fell 10.5 Canadian cents to yield 1.534% and the 10-year CA10YT=RR was down 81 Canadian cents to yield 1.397%.