Canadian firms see improved demand and sales in the coming year, largely fueled by rate cuts, but are concerned about the potential damage from promised U.S. policies, the Bank of Canada said on Monday. The Bank's fourth quarter business outlook survey said overall business sentiment remained subdued. The survey is closely watched by the BoC as it gives a perspective on investment and hiring intentions of companies. The business outlook indicator - a metric of prospects under current economic conditions - improved to -1.18, its best standing in the last five quarters but continued to be below average.