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TSX down 0.3%

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Gold prices at two-week-low

(Updated at 10:48 a.m. ET)

By Nikhil Sharma

June 26 (Reuters) - Canada's main stock index slid on

Wednesday, hurt by rise in yields after receding July bets for

an interest-rate cut by the Bank of Canada, but gains in

materials shares kept the losses in check.

At 10:48 a.m. ET (14:48 GMT), the Toronto Stock Exchange's

S&P/TSX composite index was down 71.92 points, or

0.33%, at 21,716.56.

Weighing on the markets, Canadian 10-year benchmark yield

rose 8 basis points and was last at 3.471%, a day

after the domestic inflation surprisingly came in hotter than

expected on Tuesday.

"The inflation report gave a little bit more of a knee-jerk

reaction. Eventually the narrative is going to change, but it is

still focused on getting back to the 2% for inflation," said

Benjamin Jang, portfolio manager at Nicola Wealth.

Traders now see the Canadian central bank holding rates

steady in July, while anticipating roughly two 25-basis-point

rate cuts later this year.

BofA Securities however expects a cut in July, as it

anticipates a fall in July CPI data which is expected to be

released right before BoC' monetary policy meeting.

Most sectors were trading in the red, except industrials

and materials, which rose 0.1% and 0.9%,

respectively.

Gold prices were in focus after slipping 1% to their lowest

level in more than two weeks, weighed down by a stronger dollar

and higher bond yields, while traders looked forward to U.S.

inflation data due later this week.

On Wall Street, the main indexes also slipped as

semiconductor and megacap stocks gave back on premarket gains,

while investors awaited key inflation data later in the week.

Among individual stocks, the Onex Corp ( ONEXF )- backed

WestJet Airlines said a union representing its maintenance

engineers rejected its new offer and served a second strike

notice. The company rose by 0.6% in early trading.