* C$ ends at C$1.0511
* Turnaround in oil prices helps pare losses
* Bond prices higher ahead of CPI data (Recasts to close)
By Frank Pingue
TORONTO, Nov 17 (Reuters) - Canada's dollar closed lower on Tuesday but a backdrop of stronger equities and firm prices for key Canadian exports helped it reverse much of an earlier drop to its lowest level in a week.
The lower close snapped a two-session string of gains for the domestic currency. The unit is often influenced by commodity prices given the nature of Canada's exports, and by equities, an indication of investor risk appetite.
Weaker equities overnight and lower commodity prices had initially dragged the Canadian dollar down to C$1.0619 to the U.S. dollar, or 94.17 U.S. cents, its lowest level since Nov. 9.
But North American equities managed to end higher, notably a 1 percent gain by the S&P/TSX composite index .GSPTSE. Oil prices also turned around and helped open the door to Canadian dollar buying. [.TO]
"All those things that we look at for direction in Canada came back a bit after things were looking pretty bleak in the morning, and Canada was able to rally a bit," said Steve Butler, director of foreign exchange trading at Scotia Capital.
The Canadian dollar closed at C$1.0511 to the U.S. dollar, or 95.14 U.S. cents, down from C$1.0471 to the U.S. dollar, or 95.50 U.S. cents, at Monday's close.
Oil prices managed to rise more than 1 percent as demand for oil products supported crude, while gold ended a shade higher. [O/R] [GOL/]
BOND PRICES HIGHER
Domestic bond prices, with no Canadian data to influence investor sentiment, ended higher across the curve alongside the bigger U.S. Treasury market. [US/]
Canadian bonds may get some domestic influence on Wednesday from the consumer prices data due at 7:00 a.m. (1200 GMT). The report is expected to show core inflation, which strips out energy and other volatile items, was flat in October. [ID:nN1721923]
The two-year Canada bond ended up 6 Canadian cents at C$99.88 to yield 1.310 percent, while the 30-year bond rose 35 Canadian cents to C$118.30 to yield 3.908 percent.
Canadian bonds outperformed U.S. Treasuries across much of the curve. The Canadian 10-year yield was 4.70 basis points above its U.S. counterpart, down from 4.80 basis points on Monday. (Editing by Jeffrey Hodgson)