(Updates with morning prices)

By Ragini Mathur

June 19 (Reuters) - Canada's main stock index fell on

Thursday, as caution prevailed over heightened tensions in the

Middle East and the United States' possible involvement in the

conflict.

The S&P/TSX composite index was down 0.2% at

26,510.63 points.

Israel bombed nuclear targets in Iran on Thursday and

Iranian missiles hit an Israeli hospital overnight, as the

week-old air war escalated with no sign yet of an off-ramp.

President Donald Trump, meanwhile, has kept the world

guessing about whether the U.S. would join Israel in the

airstrikes.

"There is potential for the U.S. to become more involved,

which is not desirable, and I think that the overall escalation

of the conflict period is definitely weighing down global

sentiment," said Shiraz Ahmed, founder & CEO at Sartorial Wealth

Inc.

The conflict has impacted oil prices, which rose on the day

and boosted the energy sector by 0.6%.

On the flip side, healthcare stocks were the

biggest decliner, down 0.9%, with pharmaceutical firm Bausch

Health companies ( BHC ) falling 2.4%.

Information and Technology fell 0.7%. Materials

dropped 0.6% as gold prices held steady while copper

hit a near one-week low. Most other base metals also declined,

pressured by a stronger U.S. dollar. GOL/MET/L

The benchmark index shed most of its gains to end almost

flat on Wednesday after Federal Reserve Chair Jerome Powell said

inflation in goods prices is expected to go up over the summer

as Trump's tariffs work their way to consumers.

Also on Wednesday, Bank of Canada Governor Tiff Macklem said

that the prospect of a new Canada-U.S. trade deal offers hope

that tariffs will be removed, but cautioned that inflation could

rise if tariffs remain in place.

Trump and Canada's Prime Minister Mark Carney this week

agreed to reach a trade deal between the two countries in 30

days.

Among individual stocks, food retailer Empire Company Ltd ( EMLAF )

jumped 5.4% to the top of TSX after reporting

quarterly profit above the analyst's estimates.

Trade volumes are expected to remain thin as U.S. markets

are closed for a public holiday.