* Canadian dollar gains 0.2% against greenback * Canadian retail sales rise 2.1% in August from July * Price of U.S. oil increases nearly 1% * Canadian 10-year yield eases 2.4 basis points to 1.677% By Fergal Smith TORONTO, Oct 22 (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Friday as oil prices rose and domestic data showed retail sales climbing in August, with the currency on track to advance for a fifth straight week. Canadian retail sales rose 2.1% in August from July as sales at food and beverage stores increased for the first time in three months and even as global supply shortages held back auto sales, data from Statistics Canada showed. Preliminary estimates for September were less encouraging, showing retail sales falling 1.9% and manufacturing sales down 3.2%. "The flash estimates for September aren"t great news for the final month of the quarter," Royce Mendes, senior economist at CIBC Capital Markets, said in a note. "We"ll be looking to next week"s sneak peak of September GDP to see whether sectors not affected by the auto industry"s challenges were able to offset that weakness." The price of oil, one of Canada"s major exports, rose as concerns about tight supply and stockpiles fueled bullish sentiment. U.S. crude prices rose nearly 1% to $83.28 a barrel, while the Canadian dollar was trading 0.2% higher at 1.2338 to the greenback, or 81.05 U.S. cents. The currency traded in a range of 1.2322 to 1.2375, after touching on Thursday its strongest level in nearly four months at 1.2287. For the week, the loonie was on track to gain 0.2%. Gains for the loonie come ahead of a Bank of Canada interest rate announcement next week when the central bank is expected to largely end stimulus from its bond-buying program. Money markets expect four interest rate hikes next year. Canadian government bond yields were mixed across a flatter curve. The 10-year yield touched its highest level since January of 2020 at 1.713% before easing to 1.677%, down 2.4 basis points on the day. (Reporting by Fergal Smith Editing by Paul Simao)