OTTAWA (Reuters) - Canadian retail sales posted better than expected gains in August, data showed on Thursday, adding to recent evidence that the economy is crawling toward recovery.

Higher sales at gasoline stations and new car dealers drove sales up by 0.8 percent in August, more than retracing the unexpected drop of 0.5 percent in July, Statistics Canada said.

Excluding these retailers, sales were flat.

The increase was greater than the 0.4 percent rise predicted by market analysts. In volume terms, retail sales grew by 0.4 percent from July.

"In a bigger picture sense, this report just confirms that the domestic economy is OK. Not too hot, not too cold, just OK," said Scotia Capital economists Derek Holt and Karen Cordes in a note.

The Canadian dollar extended the session's decline against a broadly stronger U.S. dollar after the retail data, as appetite waned for higher-risk currencies ahead of the Bank of Canada's Monetary Policy Report while global stocks fell.

Analysts said the job gains in recent months have influenced consumers to spend again, even if the goods purchased were narrowly based in the automotive group.

Sales at gasoline stations rose by 3.9 percent from July while sales at new car dealers were up by 2.2 percent after two relatively flat months. A major contributor to the gain was a rise in truck sales.

"Not that sales in these areas cannibalized the other categories necessarily, but there seemed to be little interest beyond the auto sector," said Stewart Hall, an economist at HSBC Canada.

Sales declined at general merchandise stores (-0.4 percent) and miscellaneous retailers (-0.2 percent), but building and outdoor home supplies store sector was up by 0.5 percent.

Still, some were encouraged by other details, including more sales in furniture and home furnishings, and clothing, but it may not be enough to lift economic growth in August.

"Overall, this was a positive report, and it suggests that Canadian consumer spending may have regained its mojo in August, following the disappointing decline in July," said Millan Mulraine, economics strategist at TD Securities.

"However, notwithstanding the favorable support from consumer spending, the Canadian economy is expected to post its second consecutive month without GDP growth in August."

Excluding the automotive sector, which includes sales by new and used car dealers and parts stores, retail sales in August advanced by 0.5 percent, less than the 0.6 percent rise predicted by analysts.

(Reporting by David Ljunggren and Ka Yan Ng)