* C$ at C$0.9972 vs US$, or $1.0028 * Canada retail sales weaker than forecast * China HSBC PMI indicates pace of growth increase * U.S. markets closed for Thanksgiving By Alastair Sharp TORONTO, Nov 22 The Canadian dollar weakened marginally against the U.S. currency on Thursday after domestic retail sales data came in weaker than forecast, but overall trading was quiet due to the U.S. Thanksgiving holiday. Canadian retail sales edged up by a less-than-expected 0.1 percent in September from August, after July's 0.3 percent boost, Statistics Canada said. "Another disappointment clearly ... It really reflects a Canadian household that's pulling back, slowing their rate of borrowing, and in many cases looking for good deals across border, taking advantage of the high Canadian dollar," said Sal Guatieri, senior economist at BMO Capital Markets. The Canadian dollar ended the quiet trading day at C$0.9972 to the U.S. dollar, or $1.0028. This was slightly weaker than Wednesday's North American close at C$0.9965, or $1.0035. "The backdrop is still somewhat challenging," said Shaun Osborne, chief currency strategist at TD Securities. But with the United States' broad S&P 500 index back above its 200-day moving average, Osborne said he saw a chance for the Canadian currency to bounce back as the year-end approaches. "Maybe we're looking at perhaps something of a Santa Claus rally after all." Tempering the softer sentiment was HSBC's preliminary Chinese manufacturing survey. It showed expansion of the country's vast manufacturing sector was accelerating in November for the first time in 13 months, a sign that economic growth has revived after seven consecutive quarters of slowdown. "That's kind of put a small risk-on tone to the market. Even though the U.S. is not around," said David Bradley, director of foreign exchange trading at Scotiabank, who added Canada's dollar was likely to remain in a narrow trading range. The Canadian dollar was weaker against all major currencies, while prices for Canadian government debt were mixed. The two-year bond added 1 Canadian cent to yield 1.110 percent and the benchmark 10-year bond slipped 8 Canadian cents to yield 1.771 percent.