TSX ends lower as oil prices slide, BoC cuts rates

By Nikhil Sharma and Fergal Smith

(Reuters) -Canada's main stock index ended slightly lower on Wednesday, adding to the previous day's sharp decline, as losses for the energy sector offset gains for interest rate-sensitive stocks after the Bank of Canada cut rates.

The Toronto Stock Exchange's S&P/TSX composite index ended down 1.69 points, or 0.01%, at 23,040.76.

On Tuesday, the index posted its biggest decline in one month as recent signs of slower economic growth spooked investors globally.

The Bank of Canada lowered its key interest rate by 25 basis points to 4.25% as forecast on Wednesday and Governor Tiff Macklem, citing weak growth, said a larger cut could be in order if the economy needs a boost.

This process of lowering rates is not over, said Brian Madden, chief investment officer at First Avenue Investment Counsel, adding that the central bank is "very mindful that weakness is starting to emerge in the labor market."

High dividend paying stocks could particularly benefit from interest rate cuts, say analysts.

They were among the biggest gainers, with the real estate sector advancing 1.3%, utilities rising 0.7% and communication services ending 0.8% higher.

Air Canada has offered its pilots a 30% pay hike in an effort to avert strike action, Bloomberg News reported, citing people familiar with the matter. The company's shares were up nearly 1%.

In contrast, the energy sector fell 1.8% as lackluster data from the United States and China raised expectations of reduced demand for oil. U.S. crude oil futures settled 1.6% lower at $69.20 a barrel.

The materials group, which includes metal miners and fertilizer companies, also lost ground, falling 0.6%.

Canadian Prime Minister Justin Trudeau dismissed talk of early elections, vowing to continue governing, after the small political party helping keep his minority Liberal government in power withdrew its automatic support.

(Reporting by Fergal Smith in Toronto and Nikhil Sharma in Bengaluru; Editing by Marguerita Choy)