* C$ ends at $1.0061 vs US$, or 99.39 U.S. cents * Manufacturing sales fall the most in 3-1/2 years in Dec * Bond prices slip across curve By Solarina Ho TORONTO, Feb 15 The Canadian dollar gave back half a cent against its U.S. counterpart on Friday following surprisingly weak domestic manufacturing data that underscored the negative impact of the strong currency on exports. Economic data from the United States that indicated its manufacturing sector got off to a soft start this year also pressured the currency. "The U.S. industrial production was a bit on the soft side. That has negative implications for Canada as well. I think that set the tone initially," said Don Mikolich, executive director, foreign exchange sales at CIBC World Markets. "It's a light week for Canadian news. The only piece of Canadian news this week was a negative one." The country's manufacturing sales recorded the sharpest drop in about 3-1/2 years in December, due in part to weaker auto production and lower sales across most other industries, government data showed. "It's a pretty dismal report. Not a nice way to end a year," said Sal Guatieri, senior economist at BMO Capital Markets. "Very few regions are immune to the negative impact of the high Canadian dollar. It's not surprising the currency would weaken on such a dismal report." The Canadian dollar weakened to C$1.0061 versus the U.S. dollar, or 99.39 U.S. cents from Thursday's North American session close at C$1.0012, or 99.88 U.S. cents. "Moving back into the mid-parity area had people taking another crack some (U.S.) dollar selling, a bit of hedging activity as well," said Mikolich. Canada's performance was mixed against other countries. It was outperforming the Japanese yen. But it weakened against the euro and its neighboring currencies. The yen fell on Friday after three days of gains against the U.S. dollar and the euro as a draft statement from the Group of 20 nations, which are meeting in Moscow, did not single out Japan for undertaking policies that have weakened its currency. Looking ahead next week, Canadian inflation and retail sales data will be in focus. "CPI being so weak last time, people are paying a bit more attention to it now and how far out does the Bank of Canada get pushed before it really does consider raising rates," said Mikolich. "That horizon continues to drift outwards until the data suggests otherwise." Canadian government bonds fell across the curve, with the two-year bond off 1 Canadian cent to yield 1.133 percent and the benchmark 10-year bond easing 15 Canadian cents to yield 2.017 percent.