*

TSX down 0.5%

*

Canada CPI rises unexpectedly in May

(Updated at 10:17 a.m. ET)

By Nikhil Sharma

June 25 (Reuters) - Canada's main stock index fell on

Tuesday after a surprisingly stronger-than-expected inflation

report clouded hopes for interest rate cuts from the Bank of

Canada in July.

At 10:17 a.m. ET (1417 GMT), the Toronto Stock Exchange's

S&P/TSX composite index was down 0.5% at 21,733.48.

Canada's consumer prices index (CPI) numbers unexpectedly

increased in May, while other key core inflation metrics were up

for the first time in five months.

Money markets slashed their bets for a rate cut from the

central bank in July at around 54%, down from 65% before the

numbers were released.

"It is a disappointing report and what it does for the Bank

of Canada is reducing the chances of a July cut," said Douglas

Porter, chief economist at BMO Capital Markets. "But I don't

think it rules out rate cuts outright because we will get

another inflation report before they decide on rates in July."

Leading the sectoral losses were materials shares

falling 1% as gold prices dropped ahead of U.S. inflation

data due later this week. Copper prices also slipped against a

firm dollar due to weak demand in China and soaring inventories.

Dip in crude prices pushed the energy sector

down 0.7%, as it faced pressure from a stronger

dollar.

On Wall Street, the Nasdaq and the S&P 500

rose as chip designer Nvidia and some other AI-linked stocks

rose after bruising selloffs in previous sessions.

Back home, Brookfield slipped 0.7% after the asset

management firm agreed to acquire a majority stake in the French

renewable power producer Neoen SA.