CANADA STOCKS-TSX falls 1.5% as war escalation risk spooks investors

By Fergal Smith

TORONTO, March 26 (Reuters) - Canada's main stock index fell on Thursday, with technology and metal mining shares leading declines as investors worried about a potential escalation of the Middle East war.

The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE ended down 495.08 points, or 1.5%, at 31,887.52, giving back some of this week's gains. For the month of March, the index was on track to lose 7.1%.

A U.S. proposal for ending nearly four weeks of fighting is "one-sided and unfair", a senior Iranian official told Reuters, while U.S. President ​Donald Trump said Iran must make a deal or face a continued onslaught. The war has led to a spike in oil prices, boosting inflation concerns.

"Everything now is pretty much moving on the war," said Allan Small, senior investment advisor of the Allan Small Financial Group with iA Private Wealth.

"The build-up of troops in the region over the last bunch of days - that's an indication there could be an escalation in the war," Small said. "Traders won't want to be long over the weekend so you could see more selling tomorrow."

The materials group  .GSPTTMT, which includes fertilizer companies and metal mining shares, lost 3.6% as gains for the safe-haven U.S. dollar weighed on gold XAU= and copper HGc1 prices.

Technology .SPTTK was down 3.1% and heavily weighted financials ended 1.3% lower.

Bank of Montreal BMO.TO said it was targeting a return on equity of more than 15% by 2028, as it eyes growth across its wealth management and U.S. businesses. Shares of the lender fell 3.1%.

Energy .SPTTEN fared better than most other sectors but was still down 0.2%.

The price of oil CLc1 settled 4.6% higher at $94.48 a barrel on concern that a prolonged Middle East conflict could continue to disrupt energy supplies.

BRP Inc DOO.TO was a bright spot. Its shares rose 4% after the powersports product company beat estimates with its quarterly results.