(Updates with morning prices, analyst quote)

By Rashika Singh

March 31 (Reuters) - Canada's main stock index rose on

Tuesday as investors welcomed signs of potential de-escalation

in the Middle East conflict, offering a measure of relief for a

market headed for its worst monthly decline since June 2022.

At 10:55 a.m. ET, the Toronto Stock Exchange's S&P/TSX

Composite Index was up 1.2% at 32,328.56, with all

major sectors trading in green. The benchmark index is on track

to end the month 5.6% lower, but is poised for a quarterly gain

of about 2%.

U.S. President Donald Trump told aides he was prepared to

halt the military campaign against Iran even if the Strait of

Hormuz remained largely closed, leaving efforts to reopen the

vital trade gateway for a later stage, the Wall Street Journal

reported on Monday, citing administration officials.

He had earlier warned that the United States would

'obliterate' Iran's energy infrastructure if Tehran failed to

restore access to the strait.

Oil prices were choppy on Tuesday but remained on course for

a record monthly gain. The strength in crude has lifted Canadian

energy stocks, which have risen more than 17.2% so far

in March, making energy only sector set to end the month in

positive territory.

Miners also traded higher, tracking gains in gold

and silver.

The information and technology index was up about

3%.

On the data front, Canada's economy posted modest growth in

January, with monthly GDP edging up 0.1% after a 0.2% rise in

December, signalling a fragile start to the year as gains in

most goods-producing industries helped offset lingering

manufacturing weakness.

"While this (GDP figure) is still consistent with the Bank

standing pat this year, policymakers will now feel more inclined

to respond to any signs of broadening price pressures from the

oil shock," Bradley Saunders, North America economist at Capital

Economics said in a note.

The Middle East conflict has stoked inflation concerns

globally, prompting central banks such as the Bank of Canada to

rethink their policy outlook. Markets are now pricing in about

two quarter-point rate hikes by year-end, according to LSEG

data.