(Updated at 10:14 a.m. ET/ 1414 GMT)

By Nikhil Sharma

Oct 10 (Reuters) - Canada's main stock index touched a

record high on Thursday, led by gains in commodity-linked

stocks, while TD Bank dropped on a report that the

lender is expected to pay a $3 billion penalty under a U.S.

settlement.

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

was up 32.39 points, or 0.13%, at 24,257.29.

The heavyweight energy and materials

sectors gained over 1% each as they tracked higher oil and gold

prices.

Healthcare was the biggest decliner, while

financials fell 0.7% led by a 5.3% fall in shares of

TD Bank.

Canada's second-largest lender was expected to be pay about

$3 billion in penalty over charges it failed to curb money

laundering by drug cartels, the Wall Street Journal reported.

"I think that's a much bigger deal" because "it's preventing

them from perhaps growing or running their business the way that

they would like to," said Josh Sheluk, portfolio manager at

Verecan Capital Management.

Markets are now awaiting Canadian unemployment data due on

Friday for more insights on Bank of Canada's policy move later

this month.

Traders also added to their bets of a quarter-point rate cut

by the U.S. Federal Reserve in November after latest data showed

the annual increase in consumer prices was the smallest in more

than three-and-a-half years.

Markets now see a 93.3% chance of a 25-basis-point cut at

the Fed's policy meeting next month, compared to 82.8% earlier

in the day.

"We're not overreacting to one specific data point, but (the

inflation numbers are) something to pay attention to. It seems

like a bit of a repricing on the Federal Reserve's rate path,"

said Kevin Headland, co-chief investment strategist at Manulife

Investment Management.

The U.S. weekly jobless claims for last week surged,

partially boosted by Hurricane Helene and furloughs at Boeing ( BA )

.