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By Fergal Smith
(Reuters) -Canada's main stock index rose on Tuesday as Shopify led a rally in technology shares, recouping the previous day's sharp declines, and investors turned their attention to an expected interest rate cut by the Bank of Canada.
The Toronto Stock Exchange's S&P/TSX composite index ended up 130.30 points, or 0.5%, at 25,419.45, after posting on Monday its first daily decline in two weeks.
"Markets are responding to a rebound from yesterday's correction that was spurred by developments in the AI arena," said Victor Kuntzevitsky, a portfolio manager at Wellington-Altus Private Counsel.
Wall Street's main indexes also rose as AI-linked shares rallied after sharp losses on Monday.
"All eyes now are on tomorrow, on the Bank of Canada, where they are expected to announce a 25-basis-point cut," Kuntzevitsky said. "This move will aim to mitigate a potential economic downturn from the proposed U.S. tariffs and ease the burden of Canadian households with variable rate mortgages."
U.S. President Donald Trump still plans to make good on his promise to impose tariffs on Canada and Mexico on Saturday, White House spokesperson Karoline Leavitt told reporters.
The TSX stands to benefit from the expected election this year of a Conservative government that favors business-friendly economic policies and could help reduce trade uncertainty with the United States, some investors say.
The Toronto market's technology sector jumped 4.4% after falling 3.4% on Monday. Electronics firm Celestica was up 8.2% after leading Monday's selloff with a decline of 28%. E-commerce firm Shopify added 9.6%.
Heavily weighted financials rose 0.3% but the energy group was a drag, falling 1%. The price of oil settled 0.8% higher at $73.77 a barrel after hitting a multi-week low on Monday.
The materials group ended up 0.1% as higher gold prices boosted gold mining shares, offsetting declines for copper, steel and forest product producers.
(Reporting by Fergal Smith in Toronto and Ragini Mathur in Bengaluru; Editing by Sahal Muhammed and Sandra Maler)