Sept 2 (Reuters) - Canada's main stock index on Tuesday retreated from the previous session's record high, as investors returning from a long weekend turned cautious ahead of key economic data that could influence Bank of Canada's interest-rate path later this month.
The S&P/TSX composite index (.GSPTSE), was down 0.2% at 28,500.48 points.
Canada's economy contracted more than anticipated in the second quarter, as exports significantly declined.
Money markets on Tuesday increased their rate-cut bets for the September 17 meeting to 50.5% from a previous 48%, following the GDP report. 0#CADIRPR
The BoC has kept rates steady at 2.75% at its last three meetings since March.
The BoC "can easily cut 25-50 basis points in the upcoming meetings to stimulate this economy, which is basically right now non-existent," said Allan Small, senior investment advisor at Allan Small Financial Group with iA Private Wealth.
He attributed the outlook to declining business activity, weaker exports and a negative jobs report released earlier.
"This Friday, we'll get a new jobs number and we'll see what it says. If it shows jobs contraction or decline, then it's pretty much 100% done deal that they will cut rates in September."
Investors will closely watch Canada's unemployment data due later this week.
Focus will also be on the U.S. nonfarm payrolls report expected on Friday, which will provide investors and the Federal Reserve a clearer picture of the labour market that has become the centre of policy debate.
On the TSX, technology shares (.SPTTTK), fell 1%, tracking losses in U.S. peers, while rate-sensitive real estate stocks (.GSPTTRE), slipped 1.3%.
Among individual stocks, Telus Digital (TIXT.TO), rose 16.1% after Canadian telecom company Telus (T.TO), said it would buy the remaining shares in its digital services unit in a $539 million cash-and-stock deal.
A divided U.S. appeals court on Friday ruled that most of President Donald Trump's tariffs are illegal.
Canadian government 10-year bond yields rose 6.4 basis points to 3.439%. The yield on similar U.S. government benchmark debt rose to 4.265%, pressuring equities on fiscal worries.
Reporting by Sanchayaita Roy in Bengaluru; Editing by Shreya Biswas