* C$ at C$0.9996 vs US$, or $1.0003 * Lowest level since March 7 * Canadian January retail sales come in below estimates * China, euro zone PMI data weighs * Bond prices higher across curve By Jon Cook TORONTO, March 22 (Reuters) - The Canadian dollar hit a two-week low against its U.S. counterpart o n T hursday after disappointing domestic retail data added to global growth concerns following weak Chinese and European manufacturing data. Strong sales by motor vehicle and parts dealers in January drove a 0.5 percent increase in Canadian retail sales over the month, Statistics Canada said on Th ursday. But the data came in below estimates from a Reuters poll of economists that predicted a rise of 1.7 percent. "The weaker Canadian data suggests that we may see a bit more (Canadian dollar) softness," said Shaun Osborne, chief currency strategist at TD Securities. The Canadian currency slid back above parity with the U.S. dollar at $1.006 after the data was released. It was at C$0.9974 versus the U.S. dollar, or $1.0026, immediately before the release. At 9:50 a.m. (1350 GMT), the Canadian dollar stood at C$0.9996 against the U.S. dollar, or $1.0003, down from Wednesday's North American close at C$0.9923 versus the U.S. dollar, or $1.0078. It was its lowest level since March 7. The currency is down more than 1 percent against the greenback so far this month. Overnight, the HSBC flash Purchasing Managers' Index, the earliest indicator of China's industrial activity, fell to 48.1 in March from February's four-month high of 49.6. Anything below 50 is viewed as a contraction. Earlier this month China cut its 2012 economic growth target to an eight-year low of 7.5 percent. In Europe, powerhouses Germany and France both reported an unexpected contraction in manufacturing. "Those that are commodities-related to China are suffering," said Jeremy Stretch, head of foreign exchange strategy at CIBC World Markets in London. "With the euro under pressure as well it's not helping equity sentiment, which is generally a catalyst for a weaker Canadian dollar." The weak manufacturing data also sent oil prices lower, pressuring the Canadian currency, as Brent crude was set for its lowest close in more than two weeks on Thursday. Canada's dollar still fared better than other commodity-linked currencies, especially the Australian dollar , which hit a two-month low versus the U.S. dollar of $1.0368. Losses were pared after U.S. data on Thursday showed initial jobless claims fell 5,000 to a seasonally adjusted 348,000, the lowest level since February 2008. "It suggests that the improvement that we've seen in terms of these numbers recently has been sustained," said Osborne. He added that the Canadian dollar would likely stay within a range between its 200-day moving average near parity with the U.S. currency and its 40-day moving average around C$0.9950. A decline in risk appetite was reflected by higher Canadian bond prices across the curve. The two-year bond was up 7 Canadian cents to yield 1.249 percent, while the 10-year bond rose 35 Canadian cents to yield 2.198 percent.