* C$ recovers to $1.0029 from 2-week low of 99.69 US cents
* Bonds ease across the curve after data
* Next up: Canadian retail sales for November (Updates to close)
TORONTO, Jan 20 (Reuters) - The Canadian dollar fell for a third straight session against the U.S. currency on Thursday, and was at its weakest levels in more than two weeks after the release of stronger-than-expected Chinese and U.S. data.
Soft equity markets and a slump in the price of crude oil also put pressure on the risk-based Canadian dollar, but it still managed to pare losses in the second half of the North American session, partly due to technical plays.
"It has come back to some degree," said Jack Spitz, managing director of foreign exchange at National Bank Financial.
The Canadian dollar hit an intraday low of C$1.0031, or 99.69 U.S. cents, its weakest level since Jan. 4. That was just a few ticks from its lowest point of 2011 at C$1.0035 to the U.S. dollar, or 99.65 U.S. cents.
Spitz said the U.S. dollar pared some gains against the Canadian currency because it failed to break through a key technical resistance level at C$1.0040.
"It wasn't breached today, so as a result there were technical (U.S. dollar) sellers that created momentum on some stops below C$0.9980."
He said a much deeper U.S. dollar correction would be likely should the Canada currency close above C$0.9950 to the U.S. dollar.
The Canadian dollarclosed at C$0.9971 to the U.S. dollar, or $1.0029, down from Wednesday's North American finish of C$0.9955 to the U.S. dollar, or $1.0045.
Chinese economic growth soared past forecasts to rise by 9.8 percent in the fourth quarter and inflation slowed less than expected, which sparked market fears of monetary policy tightening in China, which might slow demand for Canadian resources.
Also, a round of stronger-than-expected U.S. data pushed up the U.S. dollar at the expense of the Canadian currency. U.S. jobless claims showed the biggest drop in nearly a year, and U.S. home resales jumped more than expected in December. The data rekindled the view of an overall strengthening of the U.S. economy. [ID:nN20105802]
"We've got a general risk-aversion feel that's going through markets," said David Watt, senior currency strategist at RBC Capital Markets.
"The Canadian dollar was already flirting just below parity before the U.S. data came out. Even though we got some fairly good data coming out of Canada it seems to be that the data out of the U.S. was a little bit more of a dominant factor."
The currency's one-for-one footing with the U.S. dollar started to falter on Tuesday when dovish language by the Bank of Canada in its interest-rate statement raised some doubts about the timing of the next rate hike. [ID:nN18138776]
Two Canadian economic indicators released on Thursday brightened the fourth-quarter economic view, and kept pressure on Canadian government bond prices.
Statistics Canada said wholesale trade rose 1.2 percent in November, advancing for the fourth month in a row, while the composite leading indicator rose 0.5 percent in December. Both indicators beat expectations. [ID:nN2083816]
But the data did little to change near-term expectations on interest rate hikes.
Market pricing for the Bank of Canada's interest rate decision in March showed a 94.05 percent probability of no change in rates, as measured by a Reuters calculation of yields on overnight index swaps.
Investors next turn to Canadian retail sales for November, due on Friday at 8:30 a.m. (1300 GMT). The data is expected to show a 0.5 percent increase after October's 0.8 percent advance.It is the only notable piece of North American data expected on Friday so it could have a big influence on market sentiment.
The two-year bondwas down 4 Canadian cents to yield 1.712 percent, while the 10-year bond lost 56 Canadian cents to yield 3.307 percent. Canadian government bonds outperformed their U.S. counterparts across the curve. (Editing by Peter Galloway)
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