* C$ ends at C$0.9932 to US$, or $1.0068 * Currency splits from rising equities, commodity prices * Bank of Canada expects to lower growth forecast this week By Claire Sibonney TORONTO, Jan 21 (Reuters) - The Canadian dollar weakened slightly against its U.S. counterpart on Monday, bucking the familiar trend in which investors buy the currency when equity markets and commodity prices rise. U.S. stock markets, which were closed on Monday for the Martin Luther King Day holiday, ended last week at five-year highs as early earnings impressed, while gold rose and oil held steady. Toronto's stock market also rallied to a near 11-month high, led by a jump in Research in Motion. European shares inched toward two-year highs on Monday as a political attempt to break a budget impasse in the United States and expectations of aggressive Japanese stimulus bolstered the appetite for shares. Last week, Shaun Osborne, chief currency strategist at TD Securities, noted that in terms of cross market correlations, the Canadian dollar has had a significantly closer link to stocks at around 80 percent, compared with crude, at less than 40 percent. He said the currency's correlation with the S&P 500 was approaching peak levels of 80 to 90 percent that were sustained through mid-2012. But many analysts now say these typical correlations are breaking down. "We've been trapped in this risk-on, risk-off sentiment and ... and that time I think is decidedly over," said Mark Frey, chief market strategist at Cambridge Mercantile Group, in Victoria, British Columbia. "I think those correlations are going to begin to come back down more normalized levels, and we see that even on days when risk is on, we're not seeing the Canadian dollar respond the way the same way it did six months ago." Instead, market players are expecting top-tier domestic data such as employment, growth and international capital flows to have more influence in driving the market. "All in all, with all the drivers pointing to Canadian dollar strength, it doesn't totally follow that the currency has weakened," said Camilla Sutton, chief currency strategist at Scotiabank. The Canadian dollar ended the North American session at C$0.9932 to the greenback, or $1.0068, compared with C$0.9918, or $1.0083, at Friday's close. Sutton expected the day's range to hold between C$0.9891 and C$0.9973. The Canadian currency retreated 0.7 percent last week to near a three-week low as investors knocked it out of a recent tight range with a push past a technical support level. Sutton suggested the Canadian dollar could have fallen victim to a staunch of official flows, citing as an example the Swiss central bank not needing to buy other currencies so forcefully. The Canadian dollar was also weak against other major currencies, including the euro, the Swiss franc and the Japanese yen. "We're definitely seeing that North America is separating itself from some overperformance from the growth perspective versus both Europe and Japan," added Frey. Canadian bond prices edged lower across the curve, with the two-year down 2 Canadian cents to yield 1.189 percent, and the benchmark 10-year bond off 13 Canadian cents, yielding 1.935 percent. Trading volume was light due to the U.S. holiday, while investors were also eyeing a Bank of Japan policy-setting meeting overnight at which the bank is expected to ease monetary policy further. The Bank of Canada is expected to hold rates steady when it announces its rate policy on Wednesday, together with the publication of its Monetary Policy Report. Analysts are expecting the central bank to lower its growth forecast as Canada's economy struggles to register more than limp growth. Canada's wholesale trade increased by 0.7 percent in November from October, largely due to higher sales of computer and communications equipment and supplies, data released on Mondays showed. Other domestic data on tap this week include retail sales numbers due out on Tuesday and December consumer price index data on Friday.