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* C$ ends at C$1.0229 vs US$, or 97.76 U.S. cents * Canadian dollar had hit one week-high * Bond prices retreat across curve By Jennifer Kwan TORONTO, May 29 (Reuters) - The Canadian dollar backed off from a one-week high against its U.S. counterpart on Tuesday and managed to eke out a small gain, but its climb was held back by worries over Spain's escalating borrowing costs and its fragile banking sector. Canada's currency was supported by firmness in global equity markets, typically a barometer of investor risk appetite. The currency climbed as high as C$1.0207 against the greenback, or 97.97 U.S. cents, its strongest level since May 22 as investors reacted enthusiastically to reports of possible new stimulus from China. Investors were also optimistic about recent polls showing a party that backs Greece's international bailout was leading ahead of a June 17 election. If the New Democracy Party can form a government, Greece would be less likely to quit the euro. But gains were kept in check by broader moves in the euro, which fell to its weakest against the greenback in nearly two years on Spain's soaring borrowing costs and expectations more spending will be necessary to support its ailing banking. "It's really just a reflection overall all of a deterioration or a lack of certainty with the outlook for Europe," said Camilla Sutton, chief currency strategist at Scotiabank. The Canadian dollar ended at C$1.0229 versus the U.S. dollar, or 97.76 U.S. cents, slightly higher from Monday's North American session finish at C$1.0238 versus the U.S. dollar, or 97.68 U.S. cents. Canada's dollar outperformed most of its G10 currency peers including the euro, British pound and Australian dollar. It underperformed the New Zealand dollar and the Mexican peso. Sutton said she sees the currency trading overnight in a tight range of C$1.0220-C$1.0320 against the U.S. currency. Sal Guatieri, senior economist at BMO Capital Markets, said the Canadian dollar was also held back by U.S. data that showed consumer confidence unexpectedly cooled in May. "Whenever we see soft economic growth in the U.S. it undermines Canadian export growth and therefore the outlook for the Canadian dollar," he said. Later in the week, the all-important U.S. jobs report, Canadian growth numbers, and an Irish vote on the European Union's new fiscal treaty will provide further direction for currency traders. Canadian government bond prices drifted lower across the curve with Canada's two-year bond sank 17 Canadian cents to yield 1.167 percent, while the benchmark 10-year bond slipped 35 Canadian cents to yield 1.880 percent.