* C$ dips to 94.40 U.S. cents
* Stocks, gold price help C$ regain ground
* Bonds gain on risk aversion
(Updates to close, adds details, quotes)
By Claire Sibonney
TORONTO, Feb 25 (Reuters) - The Canadian dollar touched a two-week low on Thursday as market players fled to the greenback and other safe havens on worries about possible downgrades to Greece's sovereign debt and sluggish U.S. economic data.
But the Canadian currency retraced much of its losses to close only slightly weaker, as equity markets rallied and gold prices rose, restoring some investor appetite for the commodity-linked currency.
EU inspectors and ratings agencies piled pressure on Greece to deliver promised cuts to its huge budget deficit, as Athens prepares to borrow on jittery markets in the middle of a debt crisis. [ID:nLDE61O20P]
On the data front, demand for a wide range of U.S. manufactured goods unexpectedly fell in January, while new applications for jobless benefits rose again last week, suggesting a step back in the economic recovery. [ID:nN2597849]
"Ironically when the U.S. numbers are weaker and you get risk aversion going higher, they tend to buy the U.S. dollar, along with the yen, which has performed very well as well," said Shane Enright, executive director of foreign exchange sales at CIBC World Markets.
Helping to offset risk aversion sentiment, Toronto's main stock index closed almost 1 percent higher on Thursday as healthy bank earnings and a turnaround in the price of gold lifted two of the index's biggest sectors. [.TO]
The Canadian dollar closed at C$1.0593, or 94.40 U.S. cents, slightly down from Wednesday's close of C$1.0540 to the U.S. dollar, or 94.88 U.S. cents. Earlier, the currency dropped to C$1.0680, or 93.63 U.S. cents, its lowest level since Feb. 10.
BONDS RISE AS RISK AVERSION STILL WEIGHS
Canadian bond prices were higher across the curve, as investors remained cautious about weak U.S. economic data and sovereign credit woes in the euro zone.
The two-year Canadian government bond CA2YT=RR added 10 Canadian cents to C$100.420 to yield 1.287 percent, while the 10-year bond CA10YT=RR rose 35 Canadian cents to C$102.70 to yield 3.407 percent.
Canadian bonds lagged their U.S. counterparts at the long end of the curve, with the difference between 10-year yields narrowing almost 1 basis point to 23.3 from 24.2 on Wednesday.
On the supply front, the Bank of Canada said it plans to auction C$3 billion of government of Canada bonds on March 3 with a coupon of 2.5 percent and maturing in June, 2015. [ID:nTOR007225]
The central bank will also auction C$2 billion in 34-day treasury bills on Feb. 26. [ID:nTOR007222]
In new issue news, Hydro Quebec, one of Canada's largest utilities, added C$500 million in a reopening of bonds due Feb. 15, 2050. [ID:nN25251006] (Reporting by Claire Sibonney; Editing by Jeffrey Hodgson)