* C$ ends flat at C$0.9919 vs US$, or $1.0082 * Little changed on week, down 0.1 percent * Bond yields hit new 2012 highs By Claire Sibonney TORONTO, March 16 (Reuters) - Canada's dollar ended flat against the greenback on Friday, but fell with the U.S. dollar against other major currencies as U.S. and Canadian economic data disappointed the market. The U.S. dollar's drop halted a rally that had taken it to an 11-month high against the yen and a one-month peak versus the euro. It slipped after tame U.S. inflation data prompted investors to rethink expectations of higher U.S. interest rates. In Canada, data showed the manufacturing sector's long trudge to recovery from the 2008-09 recession faltered in January as sales at the factory gate fell unexpectedly. "The trend for today and the week overall is basically that North American currencies have been moving together," said Greg Moore, FX strategist at TD Securities. "That's why we've seen the (Mexican) peso, the CAD and the U.S. dollar all underperforming today, along with the disappointing U.S. and Canadian data." The Canadian dollar closed the North American session at C$0.9919 versus the U.S. dollar, or $1.0082, little changed from Thursday's finish of C$0.9922 versus the U.S. currency, or $1.0079. The currency was equally flat on the week, down just 0.1 percent. Despite what he called knee-jerk reaction to the data flow on Friday, Moore noted that the Canadian dollar was still stuck in its recent "solid sideways range" against its U.S. counterpart between C$0.9850-C$1.0050. Also weighing on market sentiment, the Thomson Reuters/University of Michigan's U.S. consumer sentiment gauge slipped to 74.3 from 75.3 in February, shy of economists' forecasts for a gain to 76.0. However, appetite for riskier growth-oriented assets remained strong, reflected by this week's big sell-off of Canadian government bonds and U.S. Treasuries, which was driven by expectations for stronger growth in the U.S. economy. The recent string of encouraging U.S. data has also prompted some traders to increase bets on the possibility of a Bank of Canada interest rate hike sooner than previously expected, which would be beneficial for the Canadian dollar. "Most of the news has been positive, so we now have the market pricing in almost a 50-percent chance of a Bank of Canada interest rate hike this year," said Camilla Sutton, chief currency strategist at Scotia Capital. Canadian government bond prices fell again on Friday as risk sentiment improved and investors bought up more equities, forcing yields above this week's yearly highs. The two-year bond was down half a Canadian cent to yield 1.279 percent, reaching the highest level since August. The 10-year bond dropped 30 Canadian cents to yield 2.239 percent. The yield touched 2.301, its highest level since October.