CANADA FX DEBT-Loonie sticks to narrow range as Canada posts surprise trade surplus

* Loonie trades in a range of 1.3605 to 1.3630

* Price of oil settles 3.9% lower

* Canada posts a C$1.78 billion trade surplus in March

* 10-year yield falls 1.8 basis points to 3.599% (Updates prices and adds details on activity)

By Fergal Smith

TORONTO, May 5 (Reuters) - The Canadian dollar steadied against its U.S. counterpart on Tuesday as the price of oil fell and data showed Canada's trade balance swung to a surprise surplus.

The loonie was trading nearly unchanged at 1.3620 per U.S. dollar, or 73.42 U.S. cents, after moving in a range of 1.3605 to 1.3630. Canada posted a C$1.78 billion ($1.31 billion) merchandise trade surplus in March, compared with a C$5.11 billion deficit the month before, as higher crude oil prices and strong demand for gold drove a jump in exports while imports fell. Analysts had forecast a deficit of C$2.88 billion.

"While a trade surplus in March was unexpected, it was mainly driven by price fluctuations rather than any signs that real economic activity was stronger than anticipated," Andrew Grantham, a senior economist at CIBC Capital Markets, said in a note.

"Markets continued to react more to movements in oil prices rather than the economic data, despite the large headline beat." Separate data showed that the downturn in Canada's services economy eased in April as the level of new business increased despite concerns about tariffs and the U.S.-Israeli war on Iran. Washington said the ceasefire with Iran was intact, allaying worries that attempts by both sides to assert control over the Strait of Hormuz would lead to an escalation in hostilities.

The price of oil, one of Canada's major exports, settled 3.9% lower at $102.27 a barrel.

Canadian government bond yields were mixed across the curve. The 10-year was nearly unchanged at 3.614%, holding near a six-week high that it touched during Monday's session at 3.638%. In the Maple bond market, Alphabet Inc. launched a C$8.5 billion four-part deal, according to International Financing Review. The offering size was a record for Canada's corporate bond market, investors said. (Reporting by Fergal Smith; Editing by Nia Williams and Deepa Babington)