* TSX ends up 0.2% at 31,960.65

* For the week, the index adds 2.1%

* Energy rises 2.8% as oil settles 5.5% higher

* Materials group gains 3.4%

(Updates at market close)

By Fergal Smith

March 27 (Reuters) - Canada's main stock index edged

higher on Friday as higher commodity prices boosted resource

shares, but uncertainty around a resolution to the Middle East

conflict helped limit gains.

The S&P/TSX Composite Index ended up 73.13 points,

or 0.2%, at 31,960.65. For the week, the index added 2.1%, after

three straight weekly declines.

The war in the Gulf is still expected to last weeks, not months,

and Washington can meet all its objectives without using ground

troops, U.S. Secretary of State Marco Rubio said.

"I'm not sure any one believes that this is going to be a

short-term war. And if that's the case then inflationary

pressures are going to be greater," said Michael Sprung,

president at Sprung Investment Management.

"The big worry in investors minds is becoming (the prospect

of) higher interest rates with the possibility of recession."

Investors are leaning toward three interest rate hikes this

year from the Bank of Canada, after having expected no change in

rates before the conflict began.

U.S. consumer sentiment fell to a three-month low in March

as the war stoked inflation worries and cast a shadow over the

economic outlook.

The Canadian economy has already slowed, hampered by trade

uncertainty.

The prospect of a more protectionist United States has

spurred efforts to reduce Canada's economic reliance on its

southern neighbor. Canada's minister of international trade said

that he hopes to conclude a free-trade agreement with South

America's Mercosur bloc by the autumn.

Energy shares rose 2.8% as the price of oil

settled 5.5% higher at $99.64 a barrel. Investors have worried

that a prolonged conflict could continue to disrupt energy

supplies.

The materials group, which includes metal mining

shares, added 3.4% as the price of gold benefited from

dip buying.

Seven of the 10 major sectors ended lower, including

consumer discretionary, which lost 1.9%.

Both industrials and heavily weighted financials

were down 1.1%.