* C$ ends at 96.73 U.S. cents
* C$ rises 2.6 percent for the week
* Bond prices rise in safe-haven bid (Updates to close, adds quotes)
By Jennifer Kwan
TORONTO, June 11 (Reuters) - Canada's dollar retreated against its U.S. counterpart on Friday for the first time in five days as softer than expected retail sales report in the United States raised concerns about economic recovery.
Retail sales in the United States, which buys around three-quarters of Canadian exports, fell unexpectedly in May for the first time in eight months. Total retail sales dropped 1.2 percent, versus forecasts for 0.2 percent growth. [ID:nN11114277]
As well, the price of U.S. crude oil futures ended below $74 a barrel. Canada is the biggest oil supplier to the United States, and its currency is often influenced by moves in oil prices. [O/R]
"The general negative impact the retail sales had on equities helped to drive a little bit of that risk-aversion trade," said Sacha Tihanyi, a currency Strategist at Scotia Capital.
"If you're a shot-term person you'd think: I don't want to touch Canada right now. I'd rather touch some other currency," Tihanyi said.
The disappointing retail data raised concerns about the health of consumer spending and kept U.S. stocks down for most of the day. However, equities managed to stage a late afternoon rally, which helped to trim the currency's losses. [.N]
The Canadian dollar finished at C$1.0338 to the U.S. dollar, or 96.73 U.S. cents, down slightly from Thursday's North American finish of C$1.0312 to the U.S. dollar, or 96.97 U.S. cents.
Still, the currency's slide was cushioned by a surprisingly strong reading of U.S. consumer sentiment.
The Canadian dollar was up 2.6 percent this week as investor fears over European the sovereign debt largely dissipated. It was the currency's best weekly performance since October 2009.
"It's kind of a sigh of relief and a change of pace from the downside volatility that's come from the ongoing euro zone grind," said Tihanyi.
He added that the market currently expects the currency to trade between C$1.0300 and C$1.0400 to the U.S. dollar.
BONDS GAIN
Canadian bond prices edged higher across the curve as the weak U.S. retail data fed a safe-haven rally, mimicking moves in the U.S. Treasury market. [US/]
"We do take a lot of price discovery from the U.S. and we had very disappointing retail sales come out this morning in the U.S.," said Ian Pollick, portfolio strategist at TD Securities.
"What that really shows us is there is a certain fragility in consumer spending."
On the domestic data front, strong manufacturing growth in the first quarter drove a record jump in industrial capacity use. [ID:nN11107657]
The report is not normally seen as a major market mover, but essentially reaffirmed that economic recovery is on track in Canada, said Pollick.
The two-year government bond
Canadian bonds underperformed U.S. issues across the yield curve. The 10-year Canadian yield was 18 basis points above its U.S. counterpart, from about 11 basis points in the previous session. (Reporting by Jennifer Kwan; editing by Rob Wilson)