(Updated at 10:14 a.m. ET/ 1414 GMT)

By Nikhil Sharma

Sept 25 (Reuters) - Canada's main stock index fell

slightly on Wednesday, taking a breather after rallying to

record-high levels this month on the back of domestic and U.S.

interest-rate cuts and optimism around China stimulus.

Losses in consumer discretionary and energy stocks

outweighed gains in materials shares, sending the Toronto Stock

Exchange's S&P/TSX composite index down 13.09 points,

or 0.05%, at 23,939.13.

The index has notched seven all-time closing highs in the

month so far.

Given there has been a lot of strength in the market

over the last few weeks, "I would say it's a bit of a pause,

rather than being an actual pullback", said Graham Priest,

investment advisor at BlueShore Financial.

Canada's consumer discretionary sector was

the biggest decliner with a 0.8% fall, weighed down by Magna

International ( MGA ) losing 3.4% after Morgan Stanley

downgraded its stock to "equal-weight" from "overweight".

The energy sector, down 0.5%, was also among the

top decliners, tracking losses in oil prices as optimism around

China's latest stimulus plans waned.

China's bumper stimulus package on Tuesday sparked a global

stock market rally, but investors have raised doubts if the

measures could provide a sustainable boost to the world's

second-largest economy as it struggles with deflationary

pressures.

Canada's materials sector gained 0.6%, mirroring

strength in gold prices.

On Wall Street, the S&P 500 and Dow hovered near record

highs on Wednesday, while investors awaited more indicators on

the economy's health and upcoming interest-rate reductions.

With the Federal Reserve having already delivered a

supersized interest rate cut, the odds for another 50-basis

point trim at the November policy meeting stand at 59.1%.

Markets could get more clarity over the size of the move

after Fed Chair Jerome Powell's speech and personal consumption

expenditures (PCE) data - the central bank's preferred inflation

measure - later this week.

The TSX has gained 14.1% for the year, partly driven by the

country's policy easing cycle. The Bank of Canada cut rates for

the third time in a row in September.