CANADA STOCKS-TSX snaps losing streak as U.S. inflation data supports rate cut bets

By Fergal Smith

Dec 18 (Reuters) - Canada's main stock index rose on Thursday as investors cheered softer-than-expected U.S. inflation data and recent positive signs on the domestic economy.

The S&P/TSX Composite index .GSPTSE ended up 190.83 points, or 0.6%, at 31,440.85 after four straight days of declines, with the market moving back in reach of the record closing high it posted last Thursday.

"Overall, it seems like it's a pretty good situation in Canada," said Kevin Headland, co-chief investment strategist at Manulife Investments.

"The Canadian economy is probably doing better than many expected. We're seeing inflation right around target. The Bank of Canada is on pause right now. Sentiment is pretty strong."

Canadian retail sales data, due on Friday, could offer additional clues on the state of the domestic economy. Economists expect a flat month-over-month reading after a decline of 0.7% in September.

Wall Street's main indexes also closed higher as U.S. consumer prices increased less than expected in November, feeding expectations for Federal Reserve interest rate cuts.

Cyclical sectors were among the biggest gainers on the TSX, with industrials and heavily weighted financials both adding 0.9% and consumer discretionary ending 1% higher.

Canada's financial regulator said it was maintaining the amount of additional capital the country's largest lenders must hold, saying the big six banks are resilient in a changing risk environment.

Energy was a drag, falling 1.5%. The price of oil CLc1 settled 0.4% higher $56.15 a barrel as investors assessed the likelihood of further U.S. sanctions against Russia and the supply risks posed by a blockade of Venezuelan oil tankers.

U.S. President Donald Trump was set to sign an order recommending the loosening of federal regulations on marijuana, according to senior administration officials, a move that could further reverse decades of tough-on-weed policy.

Still, shares of cannabis firm Curaleaf Holdings Inc CURA.TO dropped 32%, giving back much of its recent sharp gains.