CANADA STOCKS-TSX steady as financial gains offset mining losses; investors assess economic data

By Avinash P

Dec 23 (Reuters) - The Canadian stock index was subdued on Tuesday, as advances in financial stocks were offset by losses in metal mining shares, while investors assessed domestic and U.S. economic data.

The Toronto Stock Exchange's composite index .GSPTSE was flat at 32,009.55 points at 10.38 a.m. ET, taking a breather after Monday's milestone of surpassing 32,000 for the first time.

Wall Street also drifted sideways as U.S. Treasury yields climbed following stronger-than-anticipated third-quarter GDP figures.

In Canada, however, the economy shrank more than expected by 0.3% in October, the largest drop in almost three years, but is forecast to stage a partial recovery in November, official data showed.

"The economy's lack of momentum reinforces our view that markets have gotten ahead of themselves in terms of pricing in interest rate hikes for next year," said Stephen Brown, deputy chief North America economist at Capital Economics.

Money markets are predicting the Bank of Canada will maintain the current interest rate before potentially increasing it by 25 basis points, likely in July 2026. 0#CADIRPR

On the TSX, heavyweight financial .SPTTFS sector was up 0.5%, outperforming peers.

Conversely, despite the ongoing rally in precious metals prices, both the gold .SSTTGD and broader metal mining .GSPTTMT sub-indexes registered the day's largest declines.

Nevertheless, the Canadian benchmark remains on track for its strongest annual performance since 2009, with mining and gold sub-indexes more than doubling in value this year.

Brian Madden, chief investment officer at First Avenue Investment Counsel, attributed gold's performance to multiple factors, including central banks diversifying reserves into gold, persistent geopolitical tensions and the diminishing opportunity cost of holding non-yielding assets as markets anticipate Federal Reserve rate cuts.

Among share moves, Strathcona Resources SCR.TO plunged 24.7% after the oil and gas producer provided an update on capital structure.