CANADA STOCKS-TSX closes down 27.22 points amid Mideast tensions, energy stocks gain

By Ragini Mathur

June 17 (Reuters) - Canada's main stock index fell on Tuesday, as investors' worries over the ripple effect of the Israel-Iran conflict pushed up energy shares, leaving other sectors lagging.

The S&P/TSX composite index .GSPTSE closed down 0.10% at 26541.39. points. The commodity-heavy benchmark index had briefly hit a record high on Monday as investors hoped that the Middle East tensions would be contained and the G7 meeting in Canada would be productive with the participation of U.S President Donald Trump.

However, the hope was short-lived as the tensions showed no signs of easing, and Trump decided to leave the meeting early. The conflict entered its fifth day on Tuesday, driving oil prices higher even though major oil and gas infrastructure and flows have so far been spared from substantial impact. O/R

"If anything, it (the conflict) could lead oil prices higher, but both Canada and U.S. are big oil producers, so it might actually end up benefiting us in the long term," said Jay Bala, co-founder and senior portfolio manager at AIP Asset Management.

Trump said he wanted a "real end" to the nuclear problem with Iran after departing early from the summit, while clarifying he was not leaving to work on a ceasefire.

Energy stocks .SPTTEN led the gains on TSX, tracking the rising crude prices. With oil companies such as Baytex Energy Corp BTE.TO, International Petroleum Corp IPCO.TO each gained 5%, topping the index, followed by steel maker Algoma Steel ASTL.TO that gained 4.27% on Tuesday. Among the laggards, Tilray Brands Inc TLRY.O was the biggest loser of Tuesday's trading day, with the shares declining by 8.62%.

Investors also welcomed the possibility of Canada getting closer to a deal with the U.S. after Prime Minister Mark Carney said he and Trump had agreed that their nations should try to wrap up a new economic and security deal within 30 days.

Industrials .GSPTTIN and healthcare .GSPTTHC weighed most on TSX with a 0.7% and 2.4% decline.