CANADA FX DEBT-Canada dollar falls on weak oil, equities
* C$ slides 1.1 percent
* Canada manufacturer shipments unexpectedly up 0.1 pct
* Bond prices rise on weak U.S. data, falling stocks
By Cameron French
TORONTO, Nov 14 (Reuters) - The Canadian dollar retreated versus the U.S. dollar on Friday as oil prices gave back some of the previous day's gains, while sluggish equity markets prompted risk-averse investors to embrace the greenback.
Canadian bond prices rose alongside U.S. Treasuries, helped by retreating stock markets and a report showing a record drop in U.S. retail sales in October.
The Canadian currency ended the session at C$1.2255 to the U.S. dollar, or 81.60 U.S. cents, down from C$1.2115 to the U.S. dollar, or 82.54 U.S. cents, at Thursday's close.
"I think throughout the day trading is in line with the selloff that we've seen on the commodity front as well as equities," said Matthew Strauss, senior currency strategist at RBC Capital Markets.
Crude oil prices fell 2 percent, weakening the appeal of Canada's oil and gas industry, while North American stocks fell sharply -- Canada's main index dropped more than 3 percent -- giving back most of the previous day's strong gains.
The Canadian dollar's weakness came despite government data showing shipments by Canadian manufacturers unexpectedly rose by 0.1 percent in September from August, driven by strong demand in the aerospace industry. Analysts had been expecting a 1.5 percent drop in sales.
Strauss said the Canadian economy's relative strength versus other industrialized nations is having little impact on the currency, which is instead reacting to the gloomy global outlook for resource demand.
The currency fell 3 percent versus the greenback during the week, and is down more than 13 percent since the end of September as demand for commodities such as oil, base metals, and potash have continued to fall.
"It's not so much the Canadian economy, but concerns about the global economy, and I think that's capping any significant Canadian dollar rally," Strauss said.
"We don't see that concern evaporating in the near future."
The greenback has strengthened during the economic uncertainty as investors have treated it as a safe-haven bid.
Strauss said that a meeting of leaders of the G20 major industrial and emerging nations this weekend would be closely watched by market players, but would not likely have much of an immediate impact on financial markets.
BOND PRICES STRENGTHEN
Canadian bond prices rose alongside U.S. Treasuries, getting an initial boost from weak U.S. retail sales data, then finishing the session strong as equity markets fell sharply in the last hour of trading.
U.S. sales dropped a record 2.8 percent in October, government data showed. Sales excluding autos were down a record 2.2 percent, versus market expectations of a 1.2 percent fall.
Eric Lascelles, chief economics and rates strategist at TD Securities, said the weak report builds the case for more Bank of Canada rate reductions, which could push bond prices higher.
"There's such a breadth of weakness in the details of the report that just suggests the U.S. is going to be in a sustained decline and that's going to weigh on central bank rates, not just in the U.S. .., but in Canada as well."
The Bank of Canada's overnight rate is currently at 2.25 percent, down from 4.5 percent last December.
The Canadian overnight Libor rate LIBOR01 was 2.4667 percent, down from 2.5583 percent on Thursday.
Thursday's CORRA rate CORRA= was 2.2460 percent, up slightly from 2.2437 percent on Wednesday. The Bank of Canada publishes the previous day's rate at around 9 a.m. daily.
The two-year bond rose 6 Canadian cents to C$101.70 to yield 1.895 percent. The 10-year bond climbed 95 Canadian cents to C$104.95 to yield 3.630 percent.
The yield spread between the two- and 10-year bond was 180 basis points, down from 182 at the previous close.
The 30-year bond added C$1.45 to C$112.80 to yield 4.223 percent. In the United States, the 30-year Treasury yielded 4.204 percent. (Reporting by Cameron French; Editing by Peter Galloway)
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