(Updates with market opening prices)

By Ragini Mathur

Jan 27 (Reuters) - Canada's main stock index fell on

Monday, as investors shaken by the rising popularity of a

Chinese discount artificial intelligence model sold AI-linked

stocks.

The Toronto Stock Exchange's S&P/TSX composite index

was down 0.7% at 25,292.46, after nine successive

sessions of gains.

Canada's information technology sector

declined 2%, dragged by a 15.4% drop in electronics firm

Celestica ( CLS ).

Metal mining shares also fell 1.8%, tracking

losses in gold prices.

But capped communication shares helped limit

the losses by rising over 1%.

Chinese startup DeepSeek launched a free AI assistant last

week, claiming it uses cheaper chips and less data. The model's

popularity caused global investors to grow skeptical of the

profitability of rivals that have invested heavily in AI.

"It's basically caused the market to call into question

everything that we thought about AI, like: we need the more

powerful chips, we need a lot of energy," said Allan Small,

senior investment advisor at Allan Small Financial Group with iA

Private Wealth.

Wall Street's tech-heavy Nasdaq sank 3%. AI

darling Nvidia ( NVDA ) plunged 13.5% and was poised for its

worst day since March 2020.

The global rout kicked off a crucial week that will see the

U.S. Federal Reserve and Bank of Canada set monetary policy,

along with quarterly results from some of the megacap U.S.

companies that drove the bulk of last year's gains in Wall

Street.

The Canadian central bank has reduced rates by a cumulative

1.75 percentage points since June 2024 and is anticipated to cut

by an additional 25 basis points.

Among individual stocks, power firm TransAlta ( TAC ) fell

the most at 15%.