CANADA STOCKS-TSX pares weekly gain as mining shares drop

By Fergal Smith

June 27 (Reuters) - Canada's main stock index pulled back on Friday from a record high, weighed by declines for mining shares, as data showed the domestic economy contracting and after U.S. President Donald Trump shattered optimism that the United States would reach a tariff deal with Canada.

The S&P/TSX composite index .GSPTSE ended down 59.63 points, or 0.2%, at 26,692.32, after posting a record closing high on Thursday. For the week, the index was up 0.7% as cooling Middle East tensions boosted investor sentiment.

The market has benefited recently from some good news and the reduction of outsized risks, said Ben Jang, a portfolio manager at Nicola Wealth.

"But that doesn't mean that economic scarring hasn't occurred," Jang said.

Canada's economy contracted by 0.1% in April from March as U.S. tariff uncertainty weighed on the goods-producing sector. Preliminary data pointed to a further decline in activity for May.

Trump abruptly cut off trade talks with Canada over its new tax targeting U.S. technology firms, calling it a "blatant attack" and saying that he would set a new tariff rate on Canadian goods within the next week.

The materials group, which includes fertilizer companies and metal mining stocks, fell 2.8% as easing of U.S.-China trade tensions reduced the appeal of safe-haven gold.

Energy also ended lower, falling 0.5%, as the price of oil posted a steep weekly decline.

TC Energy Corp TRP.TO was a bright spot. Its shares rose 2.4% after the company started collecting tolls for the Southeast Gateway natural gas pipeline in Mexico.

Seven of 10 major sectors ended higher, with real estate adding 0.7% as long-term borrowing costs fell.

The Canadian 10-year eased 2.5 basis points to 3.315%, pulling back from an earlier one-week high.