(Updates after market open)

* TSX up 0.15%

* US, Iran to extend ceasefire, Axios reports

* Financial stocks drop despite strong bank earnings

May 28 (Reuters) - Canada's main stock index inched up

on Thursday, shaking off earlier sluggishness after a report

said that the U.S. and Iran had reached an outline agreement to

extend their ceasefire.

At 11:09 a.m. ET, the Toronto Stock Exchange's S&P/TSX

composite index was up 0.15% at 34,463.92 points.

* An Axios report said that the two sides agreed on a 60-day

memorandum of understanding to extend the truce and launch

negotiations on Iran's nuclear program, but the plan still

needed U.S. President Donald Trump's signoff.

* While markets have been disappointed by false dawns

before, even tentative signs of progress toward ending the

conflict have been enough to spark rallies in stocks.

* Energy shares rose 0.34%, while the materials

group gained 1.45%.

* Financials fell 0.88% despite strong earnings

from Canadian lenders Royal Bank of Canada ( RY ), TD Bank

and CIBC.

* Investors were also assessing the latest U.S. personal

consumption expenditures data, which showed that inflation

increased at its fastest pace in three years in April, driven by

higher energy prices.

* Still, analysts at RBC Economics said the U.S. economy was

holding up well.

* "Labor market data is looking solid, and growth hasn't

meaningfully slowed. We don't expect the oil price shock will

tip the economy into a recession," they said.

* The strength of the U.S. economy often has implications

for rate moves by the Bank of Canada.