* Canadian dollar gains 0.3% against the greenback
* Price of U.S. oil increases 1.2%
* Loonie ends week up 0.2%
* Canadian bond prices rise across the yield curve
By Fergal Smith
TORONTO, May 24 (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Friday, recovering from a six-day low the day before as the greenback broadly fell and investors dialed back fears of a protracted trade war between the United States and China.
At 3:16 p.m. EDT (1916 GMT), the Canadian dollar CAD=D4 was trading 0.3% higher at 1.3437 to the greenback, or 74.42 U.S. cents. The currency, which on Thursday touched its lowest since May 17 at 1.3502, traded in a range of 1.3431 to 1.3481.
For the week, the loonie was up 0.2%.
"Going into the weekend we have seen some (U.S.) dollar selling on the back of the soft data the last few days and a bit of stability in the risk backdrop today," said Ronald Simpson, managing director, global currency analysis for Action Economics.
The U.S. dollar .DXY fell from a two-year high against a basket of major currencies after orders for U.S.-made capital goods fell, further evidence that manufacturing and the broader economy are slowing, due in part to the U.S.-China trade dispute. stocks .WORLD rose, paring some of the previous day's sharp decline, on cautious optimism after U.S. President Donald Trump predicted a swift end to the tariff war with China. runs a current account deficit and exports many commodities, including oil, so its economy could be hurt by a slowdown in the global flow of capital or trade.
The price of oil rose after two sessions of losses, but had its biggest weekly drop this year due to rising inventories and concerns about an economic slowdown. U.S. crude oil futures CLc1 settled 1.2% higher at $58.63 a barrel. Bank of Canada is done raising interest rates until at least the end of next year, with a serious risk of a cut by then as policymakers become more wary of slowing growth and global trade tensions, a Reuters poll showed on Friday. government bond prices were higher across the yield curve, with the 2-year CA2YT=RR up 5 Canadian cents to yield 1.559% and the 10-year CA10YT=RR rising 20 Canadian cents to yield 1.620%.
The gap between Canada's 2-year yield and its U.S. equivalent widened by 6.6 basis points to a spread of 60.9 basis points in favor of the U.S. bond, as profit-taking weighed on U.S. Treasuries ahead of a long holiday weekend in the United States. At 54.3 basis points on Thursday, the spread was at its narrowest since last November.