March 31 (Reuters) - Canada's main stock index rose on Tuesday as investors welcomed signs of potential de-escalation in the Middle East conflict, offering a measure of relief for a market headed for its worst monthly decline since June 2022.
At 10:55 a.m. ET, the Toronto Stock Exchange's S&P/TSX Composite Index (.GSPTSE), was up 1.2% at 32,328.56, with all major sectors trading in green. The benchmark index is on track to end the month 5.6% lower, but is poised for a quarterly gain of about 2%.
U.S. President Donald Trump told aides he was prepared to halt the military campaign against Iran even if the Strait of Hormuz remained largely closed, leaving efforts to reopen the vital trade gateway for a later stage, the Wall Street Journal reported on Monday, citing administration officials.
He had earlier warned that the United States would 'obliterate' Iran's energy infrastructure if Tehran failed to restore access to the strait.
Oil prices were choppy on Tuesday but remained on course for a record monthly gain. The strength in crude has lifted Canadian energy stocks (.SPTTEN), which have risen more than 17.2% so far in March, making energy only sector set to end the month in positive territory.
Miners (.GSPTTMT), also traded higher, tracking gains in gold and silver.
The information and technology index (.SPTTTK), opens new tab was up about 3%.
On the data front, Canada's economy posted modest growth in January, with monthly GDP edging up 0.1% after a 0.2% rise in December, signalling a fragile start to the year as gains in most goods-producing industries helped offset lingering manufacturing weakness.
"While this (GDP figure) is still consistent with the Bank standing pat this year, policymakers will now feel more inclined to respond to any signs of broadening price pressures from the oil shock," Bradley Saunders, North America economist at Capital Economics said in a note.
The Middle East conflict has stoked inflation concerns globally, prompting central banks such as the Bank of Canada to rethink their policy outlook. Markets are now pricing in about two quarter-point rate hikes by year-end, according to LSEG data.
Reporting by Rashika Singh in Bengaluru; Editing by Diti Pujara
