TSX pauses ahead of Fed, frets about Greece

By Alastair Sharp

TORONTO (Reuters) - Canada's main stock index treaded water on Tuesday as a bump in crude oil prices boosted energy stocks while investors fretted about the Greek debt crisis and awaited the Federal Reserve's looming interest rate decision.

Some miners and industrial stocks in the Toronto Stock Exchange's S&P/TSX composite index (.GSPTSE), which has been grinding slowly lower since April, dropped sharply as gold, iron ore and copper markets fell.

"Greece will continue to be a dark cloud for the coming weeks as it tries to resolve its debt problems," said Sadiq Adatia, chief investment officer at Sun Life Global Investments.

Greece's prime minister accused creditors of trying to humiliate the country, with financial markets reacting with mounting alarm as an exit from the euro appears more likely.

Adatia said the issue of when the Fed will start to raise interest rates was adding to uncertainty and that the outlook for the Canadian economy was dim.

"We still worry about a slowing Canadian economy, a weaker job market and the further impact of low oil prices," he said.

The index fell 3 points, or 0.02 percent, to 14,753.05. Half of the 10 main sectors were higher, with 133 decliners to 105 gainers.

The index's heavily weighted energy sector helped lessen the blow, however, following crude prices higher as a tropical storm moved ashore in Texas. [O/R]

Plane and train maker Bombardier Inc (BBDb.TO) was among the heftiest decliners on the index, falling 6.5 percent to C$2.45. The company will team up with Lockheed Martin Corp and Raytheon Co to develop a new surveillance and command and control aircraft for a future U.S. Air Force competition.

Industrials were off 0.4 percent, while the materials group, which includes miners, fell 1 percent. Barrick Gold Corp (Toronto:ABX.TO - News) shares fell 2.7 percent to C$13.77.

The U.S. Fed began a two-day meeting on Tuesday that is widely expected to end with policymakers deciding to keep the benchmark borrowing rate unchanged at near zero percent.

"A lot of people are waiting for (the Fed) - basically every syllable of their pronouncement and whatever their view is looking forward," said Irwin Michael, portfolio manager at ABC Funds.

(Additional reporting by Solarina Ho; Editing by Dan Grebler)