* C$ falls to 89.09 U.S. cents
* Oil drops below $72, pressures currency
* Bonds flat to higher on easing supply concerns (Adds details, quote)
By Jennifer Kwan
TORONTO, June 12 (Reuters) - The Canadian dollar fell against the U.S. dollar on Friday morning as equities markets and commodities prices weakened and as the greenback recovered after losses this week.
At 9:40 a.m. (1340 GMT), the Canadian dollar was at C$1.1225 to the U.S. dollar, or 89.09 U.S. cents, down from C$1.1032 to the U.S. dollar, or 90.65 U.S. cents, on Thursday.
Canada is a major oil producer and the Canadian currency was pressured on Friday by a drop in oil prices CLc1 to below $72 a barrel after a three-day rally. The Canadian dollar was also hit by a stronger U.S. dollar after the greenback had spent most of the week under pressure as investors turned to higher-yielding currencies and other assets. [ID:nLC158279] [FRX/]
Rises on stock markets also have been supporting the Canadian dollar recently, but equities were weaker on Friday ahead of G8 finance ministers' meetings [MKTS/GLOB] in Italy over the weekend.
"It kind of feels to me it's one of those days where everything that is risk adverse is going to be the play," said David Bradley, director of foreign exchange trading at Scotia Capital.
Higher commodity prices and stronger investor confidence have helped the Canadian dollar rise about 18 percent against the greenback since early March.
The currency's rally prompted Bank of Canada Governor Mark Carney to reiterate concerns on Thursday that the rapid appreciation of the Canadian dollar could hinder economic recovery.
"The bank is not comfortable with a stronger Canada, generally, because it impacts the export sector," said Bradley, noting "the (central bank) rhetoric is probably weakening" the Canadian unit.
More broadly, he added, it's not surprising to see a pullback in the currency given its rise and the moderation of recent optimism about a turnaround in the economy.
"The rise in the Canadian dollar over the last couple of months ... probably appreciated too much in too short of a time so I'm not really surprised to see a bit of a correction," Bradley said.
Canadian bond prices were flat to higher, tracking the U.S. Treasury market, which rose in Europe on Friday, extending gains made in the previous session after several auctions this week. [ID:nN12324456]
"You've got some relief with regard to the supply situation," said Stewart Hall, economist at HSBC Securities Canada, noting it's also "a reevaluation of the inflation story."
The benchmark two-year government bond edged 2 Canadian cents higher at C$99.72 to yield 1.398 percent, while the 10-year bond was unchanged at C$101.75 to yield 3.540 percent.
The 30-year bond rose 40 Canadian cents to C$117.15 to yield 3.978 percent. The comparable U.S. issue yielded 4.6698 percent. (Reporting by Jennifer Kwan; editing by Peter Galloway)