CANADA STOCKS-TSX flattens as trade war with US escalates

By Nikhil Sharma

March 12 (Reuters) - Canada's main stock index was flat on Wednesday as investors worried over the latest escalation in the trade war after Canada imposed retaliatory tariffs in response to U.S. levies on steel and aluminum imports kicking in.

The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE was up 0.1% at 24,323.37.

Canada swiftly responded to U.S. President Donald Trump's increased tariffs on all U.S. steel and aluminum imports, which took effect on Wednesday, by announcing plans for C$29.8 billion in retaliatory tariffs.

This comes on the heels of Trump on Tuesday backing off from his plans to double the trade duties on Canadian steel and aluminum products.

Trump's on-and-off tariff policies have created uncertainty among companies and households, hurting business investments and consumer spending.

"It's going to be a very tough period going forward. I don't see any quick repairs to the fracture that has happened between the U.S. and Canada," said Michael Sprung, president at Sprung Investment Management.

"Even if all of a sudden these tariffs were to disappear, I think the trust between the two countries has been dented."

Meanwhile, the Bank of Canada lowered its policy rate by 25 basis points to 2.75%, and warned of "a new crisis", as it tried to prepare the economy for the damage that Trump's tariffs could wreak.

Traders expect at least two more cuts by the end of 2025 amid an ever-evolving trade war with the United States. 0#BOCWATCH

On the day, information technology .SPTTTK led the gains on the index, rising 1.4%, with electronic equipment company Celestica CLS.TO and e-commerce firm Shopify SHOP.TO gaining 4% each.

Heavyweight energy sector .SPTTEN added 0.9% as oil prices gained over 1% against a weaker U.S. dollar. O/R

On the downside, capped communications .GSPTTTS was the worst hit as it lost 1.3%.