* Hits high of 94.42 U.S. cents, reverses
* Bonds higher as equity markets fall (Updates prices, adds commentary)
By Ka Yan Ng
TORONTO, Sept 17 (Reuters) - The Canadian dollar retreated from an 11-month high against a generally lower U.S. currency on Thursday, breaking a two-day climb.
The currency hit the high -- C$1.0591 to the U.S. dollar, or 94.42 U.S. cents -- in the morning as the price of oil and equity markets strengthened. But as those two supports reversed course as the day wore on, so did the Canadian dollar.
The price of oil settled little changed, while U.S. and Canadian equity markets closed lower after several days of gains. Gold prices also came off an 18-month high. The currency often tracks the direction of these markets, reflecting the country's resource-based economy.
Jack Spitz, managing director of foreign exchange at National Bank Financial, said there was no clear signal from these correlated markets to indicate a change in sentiment for the Canadian dollar, which is considered a riskier currency than the greenback.
"There is no clear indication that risk appetite has changed," he said.
"There's consolidation here in and around the low end of the two-month range that's existed," Spitz added. "That being said, we have printed a fresh calendar high for the Canadian dollar...while significant, there's still been no sustainability to the move."
The Canadian dollar finished at C$1.0668 to the U.S. dollar, or 93.74 U.S. cents, down from Wednesday's close at C$1.0649 to the U.S. dollar, or 93.91 U.S. cents.
Data released on Thursday morning showed Canadian consumer prices fell by 0.8 percent in August from a year earlier, the second-biggest 12-month drop in more than 50 years. Core inflation ticked up 0.1 percent from July and 1.6 percent year-on-year. [ID:nN17185718]
The report was largely in line with expectations and had little effect on the currency.
BONDS TURN HIGHER
Canadian bond prices moved higher across the curve, rebounding from recent weakness as stocks succumbed to profit-taking and concern mounted that the stock market rally has gone too far too fast.
The two-year bond
Canadian bonds mostly underperformed their U.S. counterparts, except in the three-year maturity. The Canadian 10-year bond yield moved to 2.7 basis points below its U.S. counterpart, compared with 9.1 basis points on Wednesday. (Editing by Peter Galloway)