Toronto stocks slip as Middle East conflict weighs (Oct 3)

(This Oct. 3 story has been corrected to say Sheluk, not Seljuk, in paragraph 9)

By Nikhil Sharma

(Reuters) - Canada's main stock index fell on Thursday in a broader decline led by mining shares as escalating tensions in the Middle East weighed on the broader market.

The Toronto Stock Exchange's S&P/TSX composite index was down 84.04 points, or 0.35%, at 23,917.48.

At least 10 sectors nursed losses on the index, led by the materials sector.

The materials sector lost nearly 1.5% as it tracked gold prices that fell on fading expectations of a hefty U.S. interest rate cut, while copper prices also retreated. [GOL/] [MET/L]

Canada's consumer discretionary and real estate sectors were also among the top losers, falling 1.3% and 1.1%, respectively.

The energy sector was the only outlier, up 1.8% as oil prices rose on Thursday over concerns that the escalating Middle East conflict could hit crude supply. [O/R]

Markets watched the developments in the Middle East as the conflict widens in the region, days after Iran launched ballistic missile strike on Israel.

"The conflict in the Middle East is heating up, and that seems to be adding to some jitters or conservatism from investors," Josh Sheluk, portfolio manager at Verecan Capital Management.

The escalation is countering the benefit Canadian markets get from higher energy prices, added Sheluk.

Investor sentiment was also weighed by data that showed business activity in Canada's services economy hit a six-month low in September as firms shed jobs and new business dropped to a near four-year low.

In the U.S., the weekly jobless claims data for last week rose marginally, while services sector activity jumped to a one-and-a-half-year high in September.

These data provide a picture on the labor market's health and clues for policy adjustment in the respective countries.

Odds for a 25-basis point cut at the U.S. Fed's November policy meeting stand at 62.9%, up from 50.7% a week earlier, the CME Group's Fed Watch Tool.

(Reporting by Nikhil Sharma in Bengaluru; Editing by Maju Samuel and Leroy Leo)