* Canadian dollar strengthens 0.2% against the greenback * Canada"s economy grows by 0.4% month-over-month in October * Price of U.S. oil rises 0.7% * Canada"s 10-year yield touches a three-week low at 0.686% By Fergal Smith TORONTO, Dec 23 (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Wednesday along with gains for oil and stocks and after domestic data showed the economy expanded more-than-expected in October. The Canadian economy grew by 0.4% in October from September, which surpassed the 0.3% pace economists had forecast. A flash estimate for November showed further expansion of 0.4%. The November estimate suggests that the pick-up in coronavirus infections and return of economic restrictions "had yet to significantly curtail activity during that month," said Ryan Brecht, a senior economist at Action Economics. "The spike in the virus and increasingly stringent restrictions are downside risks to Q1 (first quarter) GDP growth." Oil recovered from earlier losses sparked by an unexpected rise in U.S. crude oil inventories. U.S. crude prices were up 0.7% at $47.34 a barrel, while U.S. stocks gained as investors appeared to have shrugged off President Donald Trump"s threat to not sign a COVID-19 stimulus bill and data showed a drop in the number of Americans filing first-time claims for jobless benefits. The Canadian dollar was trading 0.2% higher at 1.2879 to the greenback, or 77.65 U.S. cents, having traded in a range of 1.2865 to 1.2914. On Tuesday, the loonie fell for the third straight day as investors worried that a new variant of the coronavirus, discovered spreading swiftly across southern England, would slow global economic recovery. Canada is introducing extra measures to screen people who have spent time in Britain to check for the virus variant, Public Safety Minister Bill Blair told a briefing on Tuesday. Canadian government bond yields were mixed across a steeper curve on Wednesday, with the 10-year up 1.2 basis points at 0.715%. It earlier touched a three-week low at 0.686%. (Reporting by Fergal Smith; Editing by Andrea Ricci)