* Ends lower at C$1.0581 to US$, or 94.51 U.S. cents
* Down 2.7 percent for the week
* Touches 2010 low of C$1.0603, or 94.31 U.S. cents
* Bond prices flat to a slightly higher across curve (Updates to close, adds quote)
By Jennifer Kwan
TORONTO, Jan 22 (Reuters) - The Canadian dollar hit its lowest level this year on Friday as investor confidence was shaken by concerns over a White House plan to limit risk-taking by U.S. banks and China's monetary policy stance.
The currency touched a session low of C$1.0603 to the U.S. dollar, or 94.31 U.S. cents -- its lowest level since late December -- further beaten down after data showed retail sales for November fell more than market expectations, which sparked concern about the strength of consumer demand. [ID:nN22227089]
There is a "risk-off tone" in the market, said Millan Mulraine, an economics strategist at TD Securities.
"Canada has certainly been caught up in that whirlwind," he said. "That could continue to be the case over the next little while as investors take some risk off the table as they assess the unfolding economic recovery."
The Canadian dollar finished at C$1.0581 to the U.S. dollar, or 94.51 U.S. cents, down from Thursday's finish at C$1.0514 to the U.S. dollar, or 95.11 U.S. cents. The currency dropped 2.7 percent for the week, its steepest weekly loss since late October.
The Canadian dollar's fall has been pegged to key events such as U.S. President Barack Obama's proposal to put stricter limits on financial institutions' risk-taking. [MKTS/GLOB] [.N] [ID:nN21200151]
As well, investors have been nervous over possible monetary tightening in China, which has raised worries about commodity prices and the global economic recovery.
"There has certainly has been some concern on part of the financial market that as China begins their monetary policy tightening it will slow global growth, and certainly global demand," said Mulraine.
"If China starts deliberately slowing down its economic growth than it will certainly have a negative spillover effect on other economies that have benefited from the surge of economic activity in Asia and China. This is all part of the risk-off assessment."
As well, the euro has been under steady pressure this year as investors have worried about Greece's ability to rein in its deficit. [FRX/]
In Canada, domestic data on Friday showed retail sales for November fell by 0.3 percent from October, pushed down in part by unseasonably warm weather, which cut demand for winter clothing and shoes. Market analysts polled by Reuters had predicted a 0.2 percent fall. [ID:nN22227089]
"The numbers were weaker than expected across the board," said George Davis, chief technical strategist at RBC Capital Markets.
"We're seeing a little bit of faltering on the part of the consumer. That's becoming a little bit of concern."
The price of oil, a key Canadian export, slipped to below $75 a barrel, while gold prices were also softer. Both commodities exert a strong influence on the Canadian dollar. [O/R] [GOL/]
BONDS FLAT TO SLIGHTLY HIGHER
Government bond prices were flat to slightly higher as investors took a pause after a rally in prices in the previous session.
"Right now, bond investors are more or less sitting on their hands hoping to see where things are heading," said TD's Mulraine.
The two-year bond CA2YT=RR was largely unchanged, up 2 just Canadian cents at C$100.14 to yield 1.173 percent, while the 30-year bond CA30YT=RR edged 15 Canadian cents higher to C$116.70 to yield 3.991 percent.
Canadian bonds mostly outperformed U.S. notes across the curve. The Canadian 30-year bond was 53 basis points below the U.S. 30-year yield, compared with about 50 basis points in the previous session. (Editing by Rob Wilson)