(Updates at market close)

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TSX ends down 0.4% at 27,823.88

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Technology sector loses 1.7%

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Materials group ends 1.8% lower

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Canada's inflation rate eases to 1.7% in July

By Fergal Smith

TORONTO, Aug 19 (Reuters) - Canada's main index fell on

Tuesday as technology and metal mining shares lost ground, but

the decline was limited after domestic inflation data bolstered

expectations for the Bank of Canada to cut interest rates in the

coming months.

The S&P/TSX composite index ended down 98.97

points, or 0.4%, at 27,823.88, remaining below the intraday

record high of 28,063.73 it notched last Wednesday.

"Ever since we cracked 28,000 briefly last week, the TSX has

been going sideways," said Elvis Picardo, a portfolio manager at

Luft Financial, iA Private Wealth. "One really needs a new

catalyst for the next leg up."

Canada's annual inflation rate eased to 1.7% in July from

1.9% in the prior month, helped by lower gasoline prices.

"There is little doubt that the Canadian economy is slowing,

but the Bank of Canada clearly telegraphed that future rate cuts

would be contingent on inflation," Picardo said.

Investors see a roughly 70% chance that the BoC resumes its

easing campaign by October, up from 56% before the data.

The TSX is set to extend its record-setting run this year and

next as lower borrowing costs, along with potentially greater

clarity on U.S. tariffs, offset expected pressure on corporate

profits, a Reuters poll found.

The technology sector fell 1.7% as U.S. tech shares lost

ground, and the materials group, which includes metal mining

shares, was down 1.8%.

Gold and copper prices fell, while the price

of oil settled 1.7% lower at $62.35 a barrel.

Energy fell 0.8%, with shares of uranium producer

Energy Fuels Inc down 17.5%.

Industrials were a bright spot, adding 1.1%, with

shares of Air Canada ( ACDVF ) up 1.15% after unionized flight

attendants reached an agreement with the carrier, ending a

strike.

Real estate added 1% as bond yields fell.

Canada's 10-year yield eased 4.7 basis points to

3.443%.