* C$ ends at C$0.9689 to the U.S. dollar, or $1.0321
* Bonds weaker as investors return to riskier assets
* TD says BoC to delay rate hikes to 2012 (Updates to close)
TORONTO, June 14 (Reuters) - The Canadian dollar gained nearly a penny against the U.S. dollar on Tuesday, buoyed by positive North American and Chinese data that soothed fears about the direction of the global economy.
U.S. retail sales fell less than expected in May, and excluding autos, they rose modestly. Producer prices rose more than expected. [ID:nCAT005457] [ID:nN14189699]
Meanwhile, inflation in China accelerated in May, prompting Beijing to hike its reserve ratio for the ninth time since October, but it did not raise interest rates as some had feared.
A flurry of Chinese economic data, including inflation and industrial output, suggested economic growth was slowing down, but not too quickly, relieving concerns that the world's second-biggest economy was heading for a hard landing. [ID:nNL3E7HE05P]
Also, Canadian industrial capacity use rose in the first quarter as manufacturers showed renewed strength after a year of slowing growth. [ID:nN14284333]
The data helped general risk sentiment rise but the Canadian dollar stayed stuck in the broad C$0.9650-C$0.9850 range it has been in since early May.
"I can't see us breaking out too much but a few guys are starting to look for a possible risk rally," said John Curran, senior vice president at CanadianForex. He said he was skeptical about such a rally, citing ongoing European woes, and tepid U.S. and Canadian data.
Still, a break below C$0.9650 "may start to turn people's heads," he said.
At one point, the Canadian dollarclimbed almost a penny from the previous session's close, reaching as high as C$0.9675, its firmest level since June 1.
It pared gains by session's end, finishing at C$0.9689 to the U.S. dollar, or $1.0321, stronger than Monday's North American finish oft C$0.9768 to the U.S. dollar, or $1.0238.
On Tuesday, Toronto-Dominion Bankbecame the first primary dealer to push its forecast for the next Bank of Canada rate interest hike into 2012, warning the economy has not fully emerged from the shadow of the financial crisis. [ID:nN14196063]
TD, Canada's second-biggest lender, said it expects that the Bank of Canada will next raise its key policy rate by a quarter-point in January to 1.25 percent.
Alongside this forecast, TD said it expects the Canadian dollar will remain fairly well supported and stay within a few cents of parity with the greenback.
"Without the bank hiking we don't see that additional impetus to push higher at this stage," said David Tulk, chief Canada macro strategist at TD Securities.
Canadian bond prices were weaker across the curve as the positive economic sentiment sent investors back into riskier assets. [US/]
The two-year bondfell 9 Canadian cents to yield 1.512 percent, while the 10-year bond lost 68 Canadian cents to yield 3.083 percent.
Market players will next focus on the major Canadian data of the week, manufacturing shipments data for April, due Wednesday. It is expected to be weak due to supply chain disruptions resulting from the Japan earthquake.
Bank of Canada Governor Mark Carney is speaking in Vancouver on Wednesday afternoon about the country's housing market. (Reporting by Ka Yan Ng; editing by Peter Galloway)
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