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TSX climbs as GDP data cements hopes of interest rate pause

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Sept 29 (Reuters) - Canada's main stock index edged higher on Friday, the last trading day of the quarter, as softer-than-expected GDP data bolstered hopes of a rate pause by the Bank of Canada, even as it heads to mark its worst quarter in more than a year.

At 10:33 a.m. ET (14:33 GMT), the Toronto Stock Exchange's S&P/TSX composite index (.GSPTSE) was up 51.63 points, or 0.26%, at 19,642.37.

The benchmark index, however, is on track to mark its worst quarter since June 2022 while also clocking its worst month since May.

The Canadian economy was unchanged in July, as a slight increase in services-producing industries offset the decline in the goods-producing sector.

"Inflation lags the Canadian economic cycle, and there are growing signs that the impact of earlier interest rate increases are working to cool the economy," said Claire Fan, economist at Royal Bank of Canada, in a note.

Money markets see a 74% chance that the Bank of Canada will keep its benchmark rate unchanged next month, according to LSEG data.

The Canadian dollar strengthened against its U.S. counterpart on Friday, while the yield on benchmark government debt slipped.

Rate-sensitive information technology sector (.SPTTTK) added 1.7%, while the real estate index (.GSPTTRE) was up 1.0% as softer-than-expected U.S. inflation and domestic GDP data fueled hopes of a pause in interest rate hikes.

Stateside, consumer spending increased in August, but underlying inflation moderated, with the year-on-year price rise, excluding food and energy prices, slowing to below 4.0%.

Consumer discretionary shares (.GSPTTCD) gained 1.0% on a 10.6% jump in Aritzia Inc (ATZ.TO) shares after the apparel design house beat quarterly result estimates.

The materials sector (.GSPTTMT), which includes precious and base metals miners and fertilizer companies, rose 0.5%, tracking the prices of most metals.

Gold prices rose, helped by a retreating dollar and Treasury yields, as data showed U.S. core price inflation slowed in August.

The energy sector (.SPTTEN) dropped 0.6% as oil prices slipped, shedding earlier gains in the session.

Reporting by Khushi Singh in Bengaluru; Editing by Tasim Zahid

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