July 16 (Reuters) - Canada's main stock index hit a record high on Tuesday after domestic annual inflation eased more than expected in June, boosting hopes for another rate cut by the Bank of Canada.
At 10:05 a.m. ET (1405 GMT), the S&P/TSX composite index (.GSPTSE), opens new tab was up 121.55 points, or 0.53%, at 22,873.89, set for its fifth straight session of gains.
The country's annual inflation rate cooled a tick more than expected to 2.7% in June, largely due to softer growth in gas prices, Statistics Canada data showed. Meanwhile, core inflation measures were marginally down,
Month-over-month, the consumer price index was down 0.1%, compared with a forecast for no change.
"The progress (disflationary trend) is not quite as swift as it was early in the year, but the Bank of Canada is still getting what it needs to greenlight a fresh rate cut next week," said Kyle Chapman, FX markets analyst at Ballinger Group.
With the BoC set to host its next monetary policy meeting on July 24, markets are pricing in a likelihood of about 92% of a 25 basis points (bps) rate cut.
"As inflation continues to fall, you will see interest rates cut perhaps as many as two more times before the end of the year," said Allan Small, senior investment advisor at Allan Small Financial Group with iA Private Wealth.
The yield on the Canadian 10-year benchmark notes fell 6 bps following the inflation data.
Tech shares (.SPTTTK), opens new tab topped the benchmark index with a 1.6% rise, boosted by Shopify (SHOP.TO), opens new tab stock, which jumped 5% after BofA Global Research upgraded it to "buy."
On the flip side, energy shares led the sectoral losses with a 0.5% fall as oil prices dropped on concerns about crimping demand in China after data showed slower-than-expected economic growth in the world's second-largest economy.
Barrick Gold (ABX.TO), opens new tab shares rose 0.7% after the Canadian miner's second-quarter gold output climbed almost 0.9% from a year earlier.
Reporting by Nikhil Sharma in Bengaluru; Editing by Shreya Biswas
