(Updates with morning prices)

By Ragini Mathur

June 17 (Reuters) - Canada's main stock index was flat

on Tuesday, as gains in energy shares offset weakness in other

sectors due to investor worries that the Iran-Israel conflict

could spiral into broader regional unrest.

The S&P/TSX composite index was down 0.04% at

26557.54 points. The commodity-heavy benchmark index had briefly

hit a record high on Monday as investors hoped that the Middle

East tensions would be contained.

However, the hope was short-lived as the tensions showed no

signs of easing. The conflict entered its fifth day on Tuesday,

driving oil prices higher even though major oil and gas

infrastructure and flows have so far been spared from

substantial impact.

"If anything, it (the conflict) could lead oil prices

higher, but both Canada and U.S. are big oil producers, so it

might actually end up benefiting us in the long term," said Jay

Bala, co-founder and senior portfolio manager at AIP Asset

Management.

Energy stocks were leading the gains on TSX,

tracking the rising crude prices.

U.S. President Donald Trump said he wanted a "real end" to

the nuclear problem with Iran after departing early from the

Group of Seven summit in Canada, while clarifying he was not

leaving to work on a ceasefire.

Investors also welcomed the possibility of Canada getting

closer to a deal with the U.S. after Prime Minister Mark Carney

said he and Trump had agreed that their nations should try to

wrap up a new economic and security deal within 30 days.

Information and technology stocks also rose 0.2%.

On the flip side, industrials weighed most on TSX

with a 0.6% decline.

Healthcare sector was down over 1% with Tilray

Brands ( TLRY ) dropping 6% to the bottom of the benchmark

index.