CANADA FX DEBT-C$ rises on US retail sales, most bonds fall

* C$ ends at 93.34 U.S. cents after hitting one-week high

* Bonds fall after encouraging U.S. economic data (Adds details, quote)

TORONTO, Sept 15 (Reuters) - Canada's dollar rose to a one-week high against the greenback on Tuesday, powered by a rise in the price of oil as more signs of economic recovery emerged.

The currency started to move higher after data showed sales at U.S. retailers in August rose at their fastest pace in 3-1/2 years, while a gauge of manufacturing in New York State hit a near two-year high. [ID:nN15548319]

"It's pretty encouraging for the States and for risk, so as a result the U.S. dollar got sold on that," said Brendan McGrath, senior foreign exchange trader at currency services firm Custom House in British Columbia.

McGrath also cited comments by U.S. Federal Reserve Chairman Ben Bernanke, who said the recession likely has ended but that recovery will be moderate at best. The remarks encouraged the market's willingness to buy currencies other than the safe-haven U.S. dollar. [ID:nLF110181]

In declaring the recession over, Bernanke went slightly beyond the Fed's most recent assessment that the economy was leveling off and that indications of growth had improved.

The price of oil , a key Canadian export, settled just below $71 a barrel, up 3 percent after a tepid start, [ID:nSP312072] and helped support the currency. Oil's rise also boosted the Toronto stock market's resource-heavy main index.

The Canadian currency is often swayed by the direction of stock markets and commodity prices, each seen as a yardstick of appetite for risk.

The Canadian dollar closed at C$1.0714 to the U.S. dollar, or 93.34 U.S. cents, just shy of the one-week high of C$1.0711 to the U.S. dollar, or 93.36 U.S. cents, that was hit earlier in the day.

It also finished higher than Monday's close at C$1.0835 to the U.S. dollar, or 92.29 U.S. cents.

Canadian data released on Tuesday had little impact on the currency and bonds. Labor productivity was unchanged in the second quarter, Statistics Canada said, marking five straight quarters of stagnation. [ID:nN15307691]

MOST BONDS WEAKEN

Canadian bond prices were mostly lower as the reassuring U.S. economic data pushed investors toward riskier assets. [ID:nN15531894]

Toronto stocks rose steadily from midmorning to the close, [ID:nTOR004974] while U.S. stocks were also encouraged by the day's economic data. Bonds and stocks typically trade inversely.

The two-year bond slipped 2 Canadian cents to C$99.53 to yield 1.244 percent, while the 10-year bond fell 3 Canadian cents to C$103.10 to yield 3.372 percent. The 30-year bond , however, rose 20 Canadian cents to C$118.60 to yield 3.896 percent.

Canadian bonds mostly outperformed their U.S. counterparts. The Canadian 10-year bond yield moved to 7.9 basis points below its U.S. counterpart, compared with 5.6 basis points on Monday. (Reporting by Ka Yan Ng and Jennifer Kwan; editing by Peter Galloway)