CANADA STOCKS-TSX ends lower as oil and gold prices fall

By Fergal Smith

Feb 17 (Reuters) - Canada's main stock index fell on Tuesday as recent volatility in commodity-linked stocks spooked investors, offsetting domestic inflation data that could forestall a shift to interest rate hikes by the Bank of Canada.

The S&P/TSX Composite Index .GSPTSE ended down 177.16 points, or 0.5%, at 32,896.55 after clawing back much of its earlier declines.

"We're seeing extreme volatility," said Michael Dehal, a senior portfolio manager at Dehal Investment Partners at Raymond James.

"We've seen in the last two or three weeks what's happened in those commodity stocks. Investors are trying to find some level where the volatility can level off."

The materials sector .GSPTTMT, which includes metal mining shares, declined 2.5%.

The price of gold remained volatile, falling more than 2% XAU=, as signs of progress in U.S.-Iran talks dampened safe-haven demand, while a stronger dollar added to the selling pressure.

Energy .SPTTEN also lost ground, falling 0.7%, as the price of oil CLc1 settled 0.9% lower at $62.33 a barrel.

Still, most major sectors ended higher, including consumer discretionary .GSPTTCS and industrials .GSPTTIN which added 1.1% and 0.7% respectively.

Investors see a roughly 40% chance the BoC will cut interest rates further this year after data showed that Canada's annual inflation rate slowed to 2.3% in January. Earlier this month, the market was leaning toward the next move in rates being a hike.

"The details of the report largely reinforce our long-held view - now priced by markets - that the BoC is likely on hold, with risks skewed more toward easing than hiking," Michael S Hanson and Bennett Parrish, analysts at J.P. Morgan, said in a note.