TORONTO (Bloomberg) — Canada's currency fell the most in five days since January, after six straight weeks of gains, as concern that the global recession won't ease soon dulled investors' appetite for riskier assets such as stocks and commodity-linked currencies.

"The markets are on the defensive," said Matthew Strauss, a senior currency strategist at RBC Capital Markets Inc. in Toronto, a unit of Canada's biggest bank by assets. "The rally is running out of steam. Risk aversion is still dominating."

The Canadian dollar, known as the loonie, weakened as reports showed US retail sales unexpectedly dropped in April and Europe's economy contracted at the fastest pace in at least 13 years in the first quarter. The loonie depreciated the most against Japan's yen since October after North American stocks fell and crude oil tumbled for the first week in four.

Canada's currency weakened 2.4 percent to C$1.1776 per U.S. dollar in Toronto, from C$1.1494 on May 8. It was the biggest drop since the five days ended January 16. One Canadian dollar buys 84.92 US cents.

U.S. stocks retreated last week for the first time in May, with the Standard & Poor's 500 Index falling five percent. Canada's benchmark stock gauge, the S&P/Toronto Composite Index, was down 4.6 percent.

The loonie tends to track movements in stock markets. The correlation coefficient between S&P 500 and the Canadian dollar was 0.74 this year, based on the percentage of change between the two. A reading of 1 would indicate they move in lock step.

The US Commerce Department said May 13 that retail sales fell 0.4 percent in April, following a 1.3 percent drop in the prior month. The median forecast in a Bloomberg News survey of economists was for sales to remain flat.

The Canadian dollar, after reaching a 54-month low on March 9, gained 13 percent through last week as signs the recession was easing reignited investors' demand for currencies tied to global growth. It touched C$1.1477 on May 11, the strongest level since November.