(Updates with morning prices, analyst quote)

By Rashika Singh

April 2 (Reuters) - Canada's main stock index ticked

lower on Thursday, as U.S. President Donald Trump's threats to

escalate attacks on Iran dampened hopes for a swift resolution

to the Middle East conflict.

At 10:17 a.m. ET, the Toronto Stock Exchange's S&P/TSX

Composite Index was down 0.4% at 32,829.15, yet it

remained poised for a weekly gain of roughly 3%.

On Wednesday, Trump said military operations would be ramped

up over the next two to three weeks, reversing earlier remarks

that the U.S. would be "out of Iran pretty quickly".

"The speech...didn't really do anything to give people a

sense that the war is coming to an end or that there are peace

talks going on," said Allan Small, senior investment advisor of

the Allan Small Financial Group with iA Private Wealth.

The war also pushed crude to around $108 a barrel, lifting

energy stocks. The energy index gained 2.1% on the day

and about 15% since the conflict erupted.

Soaring oil prices also fanned concerns of a broader spike

in inflation.

The Bank of Canada is expected to keep interest rates

unchanged this month, and traders are pricing in two

quarter-point hikes by the end of the year, according to data

compiled by LSEG.

The central bank's governing council has agreed it will have

to rely on its own judgment more than usual on rate decisions,

given heightened global uncertainty, according to minutes

released on Wednesday.

The materials index, which includes miners, fell

1.15% as gold retreated on a stronger dollar and rising oil

prices.

Air Canada ( ACDVF ) fell 4.2% on rising crude prices.

Canada's merchandise trade deficit came in much wider than

expected in February, data showed on Thursday, as a surge in

gold purchases abroad pushed imports to a record high.

Markets will be closed on Friday, April 3, in observance of

Good Friday.