April 2 (Reuters) - Canada's main stock index ticked lower on Thursday, as U.S. President Donald Trump's threats to escalate attacks on Iran dampened hopes for a swift resolution to the Middle East conflict.
At 10:17 a.m. ET, the Toronto Stock Exchange's S&P/TSX Composite Index (.GSPTSE), was down 0.4% at 32,829.15, yet it remained poised for a weekly gain of roughly 3%.
On Wednesday, Trump said military operations would be ramped up over the next two to three weeks, reversing earlier remarks that the U.S. would be "out of Iran pretty quickly".
"The speech...didn't really do anything to give people a sense that the war is coming to an end or that there are peace talks going on," said Allan Small, senior investment advisor of the Allan Small Financial Group with iA Private Wealth.
The war also pushed crude to around $108 a barrel, lifting energy stocks. The energy index (.SPTTEN), gained 2.1% on the day and about 15% since the conflict erupted.
Soaring oil prices also fanned concerns of a broader spike in inflation.
The Bank of Canada is expected to keep interest rates unchanged this month, and traders are pricing in two quarter-point hikes by the end of the year, according to data compiled by LSEG.
The central bank's governing council has agreed it will have to rely on its own judgment more than usual on rate decisions, given heightened global uncertainty, according to minutes released on Wednesday.
The materials index (.GSPTTMT), which includes miners, fell 1.15% as gold retreated on a stronger dollar and rising oil prices.
Air Canada (AC.TO), fell 4.2% on rising crude prices.
Canada's merchandise trade deficit came in much wider than expected in February, data showed on Thursday, as a surge in gold purchases abroad pushed imports to a record high.
Markets will be closed on Friday, April 3, in observance of Good Friday.
Reporting by Rashika Singh; Editing by Diti Pujara and Vijay Kishore
