CANADA STOCKS-TSX retreats from record run; focus on next week's rate decision

By Sanchayaita Roy

Sept 12 (Reuters) - Canada's main stock index edged lower on Friday as investors took a breather after two weeks of record rallies, though optimism over a potential interest-rate cut by the Bank of Canada next week kept it on track for a weekly gain.

The S&P/TSX composite index .GSPTSE was down 0.35% at 29,304.41 points. However, it was poised for a record weekly close, marking its sixth consecutive week in the green.

Economists suggest the BoC will cut its overnight rate by a quarter point on September 17, as the labour market deteriorates and economic activity weakens. They also expect at least one more cut next quarter.

Canada's central bank has faced growing pressure to resume easing after holding rates steady since March, following a cumulative 225-basis-point reduction - one of the most aggressive among the country's G10 peers.

"The fact that there haven't been a whole lot of (rate-cuts) - signals to me that (BoC policymakers) were waiting for the lagging effect of the trade dispute to show up - which the data now supports. So now that they have the ammunition to start acting, I'd predict at least 25 basis points," said Shiraz Ahmed, founder and CEO of Sartorial Wealth Inc.

"They want to balance the optics of action with meaningful cuts... signalling 'we're here to support the markets and economy' without overdoing it and shooting all their bullets too quickly."

Meanwhile, an interest-rate cut by the Federal Reserve is considered a done deal by most economists surveyed in a Reuters poll.

Traders have already priced in a 25-basis-point easing in monetary policy, following a string of recent indicators suggesting the U.S. labor market is weaker than previously thought.

On the TSX, energy shares .SPTTEN gained 0.8% as oil prices rose after a Ukrainian drone attack on a Russian port suspended loading.

Industrials .GSPTTIN and consumer discretionary .GSPTTCD stocks fell between 0.7% and 0.8%, respectively, mirroring U.S. peers. .N