(Updates to market open)

By Ragini Mathur

Dec 16 (Reuters) - Canada's main stock index dipped on

Monday after Finance Minister Chrystia Freeland resigned

abruptly ahead of the mid-term budget, while investors awaited

the Federal Reserve's rate decision later this week.

At 10:05 a.m. ET, the Toronto Stock Exchange's S&P/TSX

composite index was down 0.1% at 25,253.86 points.

Freeland quit just hours before she was due to present a

fall economic update to parliament, a document widely expected

to show the Liberal government had run up a much larger 2023/24

budget deficit than planned.

"Her reference to - "costly political gimmicks, which we

can ill afford and which make Canadians doubt that we recognize

the gravity of the moment" - isn't giving investors confidence

in the government's response to proposed 25% tariffs from the

Trump administration," said Graham Priest, investment advisor,

BlueShore Financial.

"Canada likely missed deficit targets. Investors don't

have strong confidence in the current government."

Dragging energy stocks lower, oil prices,

dropped about half a percent, pressured by weaker than expected

consumer spending in China, the world's largest oil importer.

Gold prices, however, gained against a softer

dollar ahead of the Fed's policy meeting on Wednesday when the

central bank is expected to deliver a third rate cut this year

and provide hints regarding its 2025 outlook.

A survey showed U.S. manufacturing activity contracted

further in December, with a measure of factory output dropping

to the lowest level in more than 4-1/2 years.

The Bank of Canada slashed its key policy rate by 50

basis points last week to help address slower growth, though

Governor Tiff Macklem indicated that further cuts would be more

gradual and said he does not expect a recession.

In corporate news, BlackBerry soared 15% after it

reached an agreement to sell its Cylance business to Arctic

Wolf.