* TSX ends down 0.5% at 34,823.82

* Materials group falls 1.1% as gold falls

* Consumer staples was down 1.7%

* Index heads for eighth quarterly gain in a row

(Updates at market close)

By Fergal Smith

June 29 (Reuters) - Canada's main stock index fell on Monday

as lower gold prices weighed on metal mining shares, but the

market remained on course for another quarterly gain.

The Toronto Stock Exchange's S&P/TSX Composite index

ended down 156.18 points, or 0.5%, at 34,823.82. For

the second quarter, the TSX was headed for a gain of 6.3%. That

would be its eighth straight quarterly advance, marking the

longest such stretch since 1996.

* "I think now we're just in this sideways mode where we're

trying to see what the narrative for the second half of the year

is," said Greg Taylor, chief investment officer at PenderFund

Capital Management. "We've still got this concern around higher

oil and inflation and what the Fed is going to think."

* The price of oil settled 2.2% higher at $70.75 a

barrel after attacks by the U.S. and Iran underscored the

fragility of their interim peace deal, while cautious hopes of a

continued recovery in energy shipping through the Strait of

Hormuz limited gains.

* Investors expect the Federal Reserve to raise interest

rates as soon as September to fight inflation.

* The materials group, which includes metal

mining shares, fell 1.1%. The price of gold was down 1.8%,

moving toward the bottom of its range since November.

* "Everyone is going to be watching to see if there is any

rebound in the commodities and some sort of pause in the U.S.

dollar move which has been extreme," Taylor said.

* Consumer discretionary fell 1%, with shares of

apparel retailer Aritzia Inc ( ATZAF ) down 2.9%, while consumer

staples ended 1.7% lower.

* Just two of the 10 major sectors ended higher, including

heavily weighted financials, which added 0.3%.