CANADA STOCKS-TSX retreats from record high as US bank earnings weigh on financials

By Fergal Smith

July 15 (Reuters) - Canada's main stock index pulled back on Tuesday from a record high, with heavily weighted financials among the sectors that declined as investors assessed U.S. bank earnings and after domestic inflation data reduced prospects of Bank of Canada interest rate cuts.

The S&P/TSX composite index .GSPTSE ended down 144.71 points, or 0.5%, at 27,054.14, after posting a record closing high on Monday.

Wall Street opened the second-quarter earnings season on a somber note, with banking stocks whipsawing in volatile trade.

"We're seeing profit-taking against the news because we've seen markets run up so hard for three months," said Colin Cieszynski, chief market strategist at SIA Wealth Management.

"With the U.S. banks down, it's dragging on the Canadian banks, especially because some of the Canadian banks have large U.S. operations."

The financials sector .SPTTFS, which accounts for 33% of the TSX's weighting, fell 0.6%. Eight of the TSX's 10 major sectors ended lower.

"Canadian inflation doesn't help here either because it suggests the Bank of Canada may not be able to cut much further," Cieszynski said.

Canada's annual inflation rate rose to 1.9% in June from 1.7% in May and CPI-median, one of the core measures of inflation closely tracked by the BoC, rose to 3.1% from 3%.

Money markets have largely priced out the chances of a rate cut at the BoC's next policy decision on July 30 in response to the inflation data as well as stronger-than-expected jobs data on Friday. CADIRPR

The energy sector .SPTTEN lost 0.9% as the price of oil settled down 0.7% at $66.52 a barrel.

Gold XAU= also fell. The materials sector .GSPTTMT, which includes metal mining shares, was down 0.7%.

Technology .SPTTTK ended 0.8% lower.