CANADA STOCKS-TSX edges lower as higher bond yields weigh

Updates with morning prices

By Pranav Kashyap

Feb 18 (Reuters) - Canada's main stock index slipped on Tuesday as investors digested a key data release, while an uptick in bond yields also contributed to the downward momentum.

The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE was down 0.1% at 25,499.71.

January's annual inflation rate in Canada rose slightly to 1.9% from December.

While lower prices, thanks to a sales tax reprieve, provided some relief, they were partially countered by rising costs of gasoline and natural gas, as shown in Tuesday's data.

The yield on Canada's 10-year benchmark bond CA10YT=RR and the 5-year benchmark bond CA5YT=RR climbed to their highest points in three weeks, exerting pressure on equities.

The utilities sector .GSPTTUT, which is often considered a bond proxy, slipped 0.6%.

"There is clear evidence that underlying inflation pressures are building. Given the tariff threat hanging over the economy, we still think the odds slightly favour another cut from the Bank of Canada next month, but it is shaping up to be a close call," said Stephen Brown, deputy chief North America economist at Capital Economics.

Consumer staples .GSPTTCS led the sectoral declines, falling 0.9%.

Limiting overall losses, materials .GSPTTMT rose 0.8% as it tracked a jump in gold prices driven by persistent demand for safe-haven assets.

In Riyadh, U.S. and Russian officials engaged in the highest-level discussions to date between the two former Cold War rivals, focusing on ending the conflict in Ukraine.

Meanwhile, the threat of tariffs somewhat receded as global attention shifted to the developments in the Ukraine conflict involving U.S. President Donald Trump and his Russian counterpart, Vladimir Putin.

In other stocks, Fortuna Mining FVI.TO lost 6.7% after CIBC downgraded its rating on the miner to "underperform" from "neutral".

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