(Updates to close)

By Nivedita Balu

July 18 (Reuters) - Canada's main stock index closed

lower on Friday, dragged down by weakness in industrial stocks,

as investors reacted to trade uncertainty following a report

that U.S. President Donald Trump was eyeing new tariffs on

European Union products.

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

closed down 72.92 points, or 0.27%, at 27,314.01.

For the week the index closed 1.1% higher, after hitting

record highs on Thursday.

An FT report, which said the Trump administration was eyeing

a tariff rate topping 10% even if a wider trade deal with Europe

is struck, also sent U.S. indexes lower before they partly

recovered.

"It's definitely a risk-off environment," said Michael

Dehal, a senior portfolio manager at Dehal Investment Partners

at Raymond James.

"We've had such a great run up this week on TSX, along with

the S&P and Nasdaq... you were going to get a breather on a

Friday afternoon," Dehal said.

Industrial shares fell 1%, with Canadian

Pacific Kansas City ( CP ) dropping 3.6%, the most on the

index.

Air Canada ( ACDVF ) and Canadian National Railway ( CNI )

dropped over 2.4% each.

Healthcare stocks fell 1.5% and consumer

discretionary stocks declined 1%.

On the flip side, utility stocks rose, boosted by

Capital Power ( CPXWF ) and TransAlta Corp ( TAC ) shares adding

2.3% and 1.9%, respectively.

Energy stocks climbed 0.1%, with Headwater

Exploration ( CDDRF ) and Baytex Energy ( BTE ) rising about

3.8% each.

Looking ahead, investors will assess the Bank of Canada's

Business Outlook Survey, set for release on Monday, for business

expectations amid tariff-related uncertainty.

RBC analysts expect early stabilization in businesses'

expectations for future sales, input prices and hiring in the

second quarter, with Canada's duty-free exemption for trade

compliant under the USMCA treaty.

"Better than feared growth and higher than wanted inflation

topped with the prospect of significant fiscal stimulus spending

in the year ahead - leaves a high bar for the BoC to make

additional interest rate cuts this year," RBC analysts said in a

note.