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* Canadian dollar strengthens 0.2% against the greenback * For the week, the loonie is on track to gain 0.6% * Canadian retail sales rise 3.6% in March * Price of U.S. oil rises 1.9% TORONTO, May 21 (Reuters) - The Canadian dollar rose against its U.S. counterpart on Friday as investor worries about U.S. inflation receded and domestic data showed retail sales climbing in March, with the loonie moving closer to a six-year high notched earlier in the week. Canadian retail sales rose 3.6% in March from February, surpassing estimates for a 2.3% increase, data from Statistics Canada showed. A flash estimate for April, when tighter restrictions to battle the coronavirus pandemic were imposed by some provinces, showed sales declining 5.1%. World stock markets edged higher after a volatile week, taking their lead from a stronger Wall Street as U.S. business activity data tempered inflation fears. The price of oil, one of Canada's major exports, rose after three days of losses, but were on track for a weekly fall as investors braced for the return of Iranian crude supplies. U.S. crude prices rose 1.9% to $63.1 a barrel, while the Canadian dollar was trading 0.2% higher at 1.2029 to the greenback, or 83.13 U.S. cents. The loonie was on track to rise 0.6% for the week, which would be its eighth straight weekly advance. On Tuesday, it touched its strongest level since May 2015 at 1.2013. The U.S. dollar hit its lowest level in four months against a basket of major currencies as traders' concerns about taper talk in U.S. Federal Reserve minutes faded. Canadian house prices will rise sharply in 2021, supported by ultra-low interest rates and robust demand driven by massive fiscal support, according to a Reuters poll of analysts. On Thursday, the Bank of Canada said Canada's housing market and high household debt levels had left the economy more vulnerable to economic shocks. Canadian government bond yields were little changed, with the 10-year trading at 1.542% in a shortened session ahead of the Victoria Day holiday on Monday. (Reporting by Fergal Smith; editing by Jonathan Oatis)