By Solarina Ho

TORONTO, Feb 13 (Reuters) - The Canadian dollar was

marginally firmer against the U.S. dollar on Wednesday, but with

little domestic news on the agenda it was expected to be mostly

sidelined until the $15.1 billion takeover of Canadian oil

producer Nexen Inc by China's CNOOC Ltd

closes later this month.

'It's generally been a quiet trading session today. There's

not a lot of headline flow today,' said Mazen Issa, a macro

strategist at TD Securities.

The Canadian dollar got a slight boost on Tuesday after U.S.

regulators approved the CNOOC takeover, the final hurdle the

deal faced. It is expected to close the week of Feb. 25 and

could generate buying of Canadian dollars to pay Canadian

investors for their shares.

'People took to mean that there should

be some Canada-positive flow. Although it's very unclear as to

what that flow's going to be,' said John Curran, senior vice

president at CanadianForex.

If the Nexen deal does support the currency, Curran said it

could be an excellent opportunity to sell the Canadian dollar in

the medium term, given Canada's recent sluggish economic data

and the Bank of Canada's more dovish stance.

The currency closed the North American session at

C$1.0018 versus the U.S. dollar, or 99.82 U.S. cents, slightly

firmer than Tuesday's finish of C$1.0027, or 99.73 U.S. cents.

'I think we are going to be sort of sidelined and remain

within this range until the 25th,' Curran said.

The Canadian dollar strengthened against the euro

and the yen on Wednesday and reached its strongest

level against sterling in more than five months.

'The Canadian dollar isn't the major story out there when

you look at all the other currencies and what they are doing. So

we may be dragged around a little bit by the nose due to

cross-flows, which will all filter through to us,' Curran said.

The yen was flat against the U.S. dollar on Wednesday, after

rising sharply the day before, with investors growing cautious

ahead of a key meeting of Group of 20 finance ministers and

central bankers this weekend in Moscow. Exchange rates and the

yen will likely be in the spotlight..

Policymakers and investors worry that the new Japanese

government's push on its central bank for a looser monetary

policy, which has weakened the yen, could trigger currency wars.

Issa, however, said the G20 historically does not generate

currency-moving news. He expects Canada's dollar to trade

between parity with the U.S. dollar and C$1.0050 in the near

term.

Canadian government bonds fell across the curve, with the

price of the two-year bond down 5 Canadian cents,

yielding 1.148 percent, and the benchmark 10-year bond down 35 Canadian cents, with a yield of 2.037

percent.

(Editing by Chris Reese; and Peter Galloway)

((solarina.ho@thomsonreuters.com)(1-416-941-8067)(Reuters

Messaging: solarina.ho.thomsonreuters.com@reuters.net))

Keywords: MARKETS CANADA/DOLLAR BONDS

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