* C$ rises after falling five straight sessions
* For the week, it drops 4.6 percent
* Bonds flat to lower across curve; TSX closes up
By Jennifer Kwan
TORONTO, Jan 16 (Reuters) - The Canadian dollar finished the week on a positive note on Friday, boosted by firmer oil prices and stronger equities, after falling five straight sessions against the U.S. currency.
For the week, however, the currency dropped 4.6 percent, its worst weekly performance since late October, according to Thomson Reuters data.
Most Canadian bond prices were lower, following U.S. Treasuries, and also hurt by the rise in equities.
The Canadian dollar closed at C$1.2480 to the U.S. dollar, or 80.13 U.S. cents, up from C$1.2515 to the U.S. dollar, or 79.90 U.S. cents, on Thursday.
Earlier on Friday, the Canadian currency rallied as high as C$1.2313 to the U.S. dollar, or 81.21 U.S. cents.
U.S. stocks ended higher, partly due to strength in the energy sector, with Toronto's main stock index .GSPTSE also rising with higher oil prices.
Oil settled higher at $36.51 a barrel, [ID:nLG581112] on Friday, while gold and base metals prices were also higher.
Canada is a major oil producer and exporter, and movements in the price of crude and other commodities often sway the currency.
"We've seen some signs that risk aversion is waning to some degree and that is certainly a positive longer term for the Canadian dollar," said Peter Buchanan, senior economist at CIBC World Markets.
The Canadian currency sold off in recent sessions as a string of weak economic reports this week further raised concern about the depth of the global economic downturn.
All eyes will be on the Bank of Canada's interest rate decision next week, Buchanan said. A Reuters poll released on Thursday forecast the Bank of Canada will cut rates by at least 50 basis points to help combat a global slowdown that the central bank said has pushed the country into recession.
Most Canadian government bond prices fell on Friday, tracking U.S. Treasuries, which dropped on concern over swelling supply to fund costly government stimulus plans. [ID:nN16489787]
Focus is squarely on the Bank of Canada's rate decision on Tuesday, said Paul Ferley, assistant chief economist, Royal Bank of Canada.
"Markets will be watching for indications that the Bank of Canada might be following the U.S. in terms of introduction of 'unconventional measures' to try to provide more liquidity into the system," he said.
The two-year bond edged up 1 Canadian cent to C$103.29 to yield 0.964 percent, while the 10-year bond dropped 25 Canadian cents to C$113.40 to yield 2.626 percent.
The 30-year bond fell C$1.30 to yield 3.549 percent. In the United States, the 30-year Treasury yielded 2.9143 percent. (Additional reporting by Natalie Armstrong; editing by Peter Galloway)