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* Canadian dollar bounces off Thursday's 13-month low
* Industrial capacity utilization data misses estimates
* Weak U.S. data gives shorter-dated bonds a lift
By Frank Pingue
TORONTO, Sept 12 (Reuters) - The Canadian dollar on Friday recouped all of its losses from the previous session as the U.S. dollar weakened and oil prices rose to support the commodity-linked currency, which has faltered in recent weeks.
Domestic bond prices, with no key Canadian economic data to consider, were higher on the short end of the curve alongside the bigger U.S. Treasury market as data from the United States missed estimates.
At 9:15 a.m. (1315 GMT), the Canadian unit was at C$1.0670 to the U.S. dollar, or 93.72 U.S. cents, up from C$1.0765 to the U.S. dollar, or 92.89 U.S. cents, at Thursday's close.
Earlier, the currency hit C$1.0648 to the U.S. dollar, or 93.91 U.S. cents, as the greenback slipped on concerns about the global economy and nagging concerns about Lehman Brothers, the U.S. investment bank that earlier this week failed to offer a plan on how it will raise much-needed capital.
The domestic currency climbed off the 13-month low touched during Thursday's North American session when the price of oil dropped closer to the $100-a-barrel level.
Swings in prices for the commodity generally influence the Canadian dollar since the country is a key exporter of oil, and the slide in oil prices from a record peak of $147.27 a barrel in July has rattled the currency.
But oil prices turned around on concerns that Hurricane Ike could threaten oil refineries in the United States, which is a key consumer of Canada's oil. That gave the Canadian dollar an immediate boost.
Another boost for the Canadian dollar was weak U.S. data that weighed on the greenback. Both retail sales and producer prices data from the United States missed expectations.
"Probably the biggest single factor is the U.S. dollar itself is in a bit of a retreat after seemingly being on a one-way trip north there for about two months," said Doug Porter, deputy chief economist at BMO Capital Markets.
"We've also seen a little bit of strength in oil prices as Hurricane Ike bears down on Texas and we've had a little bit of a bounce in commodity markets."
Canadian data showed industries ran at just 78.9 percent of their capacity in the second quarter of this year, which was the lowest level in 16 years and below expectations for a reading of 79.3 percent.
Canadian bond prices were given a lift on the short end of the curve as the latest U.S. data boosted the chances of an interest rate cut by the Federal Reserve.
Data from the United States showed a weaker-than-expected reading of August retail sales and a bigger-than-expected fall in headline producer price inflation for August.
"Bond (prices) are being supported by the weak retail sales report," said Porter. "And suddenly there's talk that the Fed's next move may be to ease."
Porter also said dealers are hanging in the bond market as they monitor developments with Lehman Brothers hurricane activity.
The two-year bond was up 2 Canadian cents at C$100.05 to yield 2.726 percent, while the 10-year shed 18 Canadian cents to C$105.95 to yield 3.520 percent.
The yield spread between the two-year and 10-year bond was 74.5 basis points, down from 74.0 basis points at the previous close.
The 30-year bond dropped 25 Canadian cents to C$117.40 for a yield of 3.997 percent. In the United States, the 30-year Treasury yielded 4.229 percent.
The three-month when-issued T-bill yielded 2.38 percent, down from 2.38 percent at the previous close. (Editing by Frank McGurty)