July 2 (Reuters) - Canada's main stock index edged higher on Thursday, lifted by the materials sector as gold prices jumped after a disappointing U.S. jobs report tempered expectations for interest rate hikes.
The Toronto Stock Exchange's S&P/TSX Composite Index (.GSPTSE), rose 0.2% to 34,918.59 points by 10:25 a.m. ET, following a market holiday on Wednesday.
U.S. job growth slowed more than expected in June and payroll gains for the prior two months were revised lower, pointing to a cooling labor market and prompting financial markets to scale back expectations for a near-term interest rate hike from the Federal Reserve.
Traders priced in a much slimmer chance of a rate hike from the Fed this month, but continued to see monetary policy tightening in September as likely.
"It is showing some signs of weakness in the U.S. labor market, but nothing too alarming right now," said Michael Dehal, senior portfolio manager at Dehal Investment Partners at Raymond James.
"I think the focus is still on price stability and the Fed," Dehal said.
Spot gold and silver were up 2.3% and 3.7%, respectively, as the dollar came under pressure after the jobs report. The S&P/TSX Global Gold index (.SPTTGD), rose 2.5% and the materials index (.GSPTTMT), added 1.7%.
Iran and the United States concluded a round of indirect talks in Doha on Wednesday without any clear breakthrough toward a lasting peace agreement. Oil prices still slid as supply concerns around the Strait of Hormuz eased.
Brent crude fell 1.1% to $70.8 a barrel.
Meanwhile, the U.S. denied an extension of the U.S.-Mexico-Canada Agreement for 16 years without changes. The decision keeps the agreement in place for another 10 years with annual reviews before it expires, unless the three countries agree to renew it with changes.
"That was largely expected. But going forward, investors will be looking at any signs of renegotiations," said Dehal.
Reporting by Sudeshna Ghoshal and Sruthi Shankar in Bengaluru; Editing by Tasim Zahid
