* Emerging market concern boosts demand for Treasuries
* Heavy corporate debt sales weigh on market
* Comments by officials boost optimism on Italian budget
* U.S.-Canada trade talks in focus
By Karen Brettell
NEW YORK, Sept 5 (Reuters) - U.S Treasury prices gained slightly on Wednesday as renewed weakness in emerging markets boosted demand for low risk U.S. government debt, though pressure from a heavy corporate debt supply calendar limited gains.
Emerging markets were under pressure on Wednesday with South Africa's rand at the center of fresh currency tumult and losses since January for the world's biggest emerging markets stock index nearing $1 trillion again.
"We do have a slightly bullish tone, a lot of that is the contagion risk associated with EM," said Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets in New York.
Gains were capped, however, as heavy corporate debt issuance weighed on the market, while concerns about Italy’s budget were eased by a barrage of statements by top ministers to reassure financial markets over the government’s forthcoming budget.
"There is a sense of optimism coming out of Europe at the moment with some of the Italian headlines, and of course there is Treasury supply next week (and) there is corporate supply this week," Lyngen said.
"That has provided a little bit of upward pressure on rates and kept us contained within this very definable range," he said.
Treasuries gave back much of their earlier price gains after Bloomberg reported that the British and German governments have abandoned key Brexit demands, potentially easing the path for Britain to strike a deal with the European Union.
Benchmark 10-year notes rose 1/32 in price to yield 2.900 percent, down from 2.902 percent on Tuesday.
Trade tensions between the United States and other countries, including China and Canada, are also in focus this week.
A public comment period on the possibility of fresh U.S. tariffs on another $200 billion of Chinese goods ends on Thursday, with expectations that the additional levies will be imposed by U.S. President Donald Trump.
Contentious U.S.-Canada talks to revamp the North American Free Trade Agreement are set to resume on Wednesday. Talks ended on Friday with no agreement.
Data on Wednesday showed that the U.S. trade deficit increased to a five-month high in July with the politically sensitive goods trade deficit with China surging 10 percent to a record $36.8 billion.
Markets are now focused on the Labor Department's August jobs report, which is due to be released on Friday. It will be evaluated for further indications of the strength of labor markets and wage pressures. (Editing by Paul Simao) )