* Lower risk appetite and oil prices weigh on C$
* Slide follows overnight C$ high of 87.14 U.S. cents
* Bond prices higher across the curve
By Frank Pingue
TORONTO, May 11 (Reuters) - The Canadian dollar was lower versus the U.S. greenback on Monday morning as appetite for risk weakened and yanked the currency from the six-month high it hit overnight.
Canada's currency rallied overnight to C$1.1476 to the U.S. dollar, or 87.14 U.S. cents, its highest level since Nov. 5, in a move pegged as a follow-through from Friday, when North American jobs data came in stronger than expected and boosted risk appetite.
But on Monday, as stock markets fell, investors decided to cash in on the Canadian dollar rally and that helped to boost the appeal of the safe-haven U.S. dollar.
"As it became clear the (stock) markets were going to open on a defensive footing this week the sentiment started changing and dollar Canada rallied," said Matthew Strauss, senior currency strategist at RBC Capital Markets. "The support for this move came from a change in risk sentiment."
Toronto's key stock index fell 1.67 percent at the open, while the Dow Jones industrial average slipped 0.62 percent.
Strauss said sentiment was also influenced by the emergence of more analysts' notes that suggest the current rally in equities -- Toronto's TSX index is up about 37 percent since early March -- may be overdone even if the worst of the global financial crisis is over.
At 9:35 a.m. (1335 GMT), the Canadian dollar had retreated to C$1.1571 to the U.S. dollar, or 86.42 U.S. cents, down from C$1.1497 to the U.S. dollar, or 86.98 U.S. cents, at the Friday close provided by the Bank of Canada.
Another factor weighing on the Canadian dollar was a drop in the price of oil, a key Canadian export, which backed off last week's six-month high due to caution over prospects for the global economic recovery. [ID:nSYD323900]
BOND PRICES HIGHER
Canadian bond prices were higher across the curve and reclaimed a portion of their recent slide as the weakness in equities boosted the appeal of more secure government debt.
With no key Canadian economic data due until Tuesday's merchandise trade figures and Friday's manufacturing sales report, Canadian bond prices will likely take their direction from equities and the bigger U.S. Treasury market.
The benchmark two-year Canadian government bond was up 3 Canadian cents at C$100.28 to yield 1.111 percent, while the 10-year bond rallied 25 Canadian cents to C$105.25 to yield 3.137 percent.
The 30-year bond was up 35 Canadian cents at C$118.45 to yield 3.911 percent. (Editing by Peter Galloway)