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By Kristina Cooke and Pav Jordan

WASHINGTON, July 7 (Reuters) - RBC Capital Markets won the right to be a U.S. primary dealer of Treasury securities starting on Wednesday, part of a push by the unit of Canada's largest bank to win more U.S. and European business.

The addition of RBC will increase the number of firms that deal directly with the U.S. Federal Reserve to 17 from a record low of 16. Primary dealers are required to bid at Treasury auctions and the Fed regularly consults with them as it gathers market intelligence.

RBC Capital Markets, a unit of the Royal Bank of Canada (RY.TO: Quote, Profile, Research), was the lead bookrunner for all Canadian debt, Canadian domestic corporate debt and Canadian government debt for the first half of 2009.

The firm has been actively expanding its business in the United States and in the United Kingdom and has doubled its revenue from fixed income and currency outside of Canada in the past five or six years.

"This is a logical extension of our global rates franchise, where we are already making markets as the equivalent of a primary dealer in both the UK and Canada," said Mark Standish, president and co-chief executive of RBC Capital Markets.

Though the number of primary dealers shrank to a record low in the network's 49-year history during the financial crisis, the prospect of money to be made as a wave of huge government debt issuance looms to fund economic rescue programs has made the primary dealer status more appealing to a broader range of institutions.

"This is a springboard. It gives us access to clientele that traditionally may not have dealt with non-primary dealer counterparties," said Jonathan Hunter, RBC Capital Markets' global co-head, fixed income and currencies.