(Updates with analyst comment, market open prices)

By Nikhil Sharma

Aug 29 (Reuters) - Canada's main stock index traded near

a record high on Friday, after weaker-than-expected domestic GDP

data signaled potential interest rate cuts by the central bank.

At 9:44 a.m. ET (1344 GMT), the Toronto Stock Exchange's

S&P/TSX composite index was up 0.23% at 28,499.73

points.

The index is set for an all-time closing high if gains

hold, and is just a few points shy of the intraday record high

of 28,530.19 points, set on Thursday.

Canada's economy contracted more than expected, falling

1.6% on an annualized basis in the second quarter, as exports

significantly declined.

"It is the unfortunate byproduct of having a protracted

trade war with our largest trading partner in the United

States," said Shiraz Ahmed, founder & CEO of Sartorial Wealth

Inc.

"Even though (the central bank) will likely start cutting

... there's only so much monetary policy can fix."

The chances of a rate cut in Canada next month are now

nearly a coin flip, with odds rising to 48.5% from 38% earlier

in the day.

The Bank of Canada has kept rates steady at 2.75% at its

last three meetings since March.

TSX's consumer discretionary subindex led

sectoral gains on Friday, climbing 0.7%. The energy index

rose 0.3%, and was the top performer for the week, up

1.8%.

During the week, top Canadian lenders reported growth in

quarterly profits and set aside lower-than-expected provisions

for bad loans as trade tensions with the U.S. eased.

Financials were up 1.5% for the week.

Canada's benchmark index is headed for its fourth

straight monthly gain, its longest such streak in nearly ten

months, powered by cooling trade jitters, U.S. policy easing

hopes and largely upbeat earnings season.

On Wall Street, a largely in-line Personal Consumption

Expenditures Price Index data did little to alter rate cut

expectations.