Aug 31 (Reuters) - Canada's main index fell to a more than one-week low on Monday as renewed Middle East hostilities and worsening trade ties with the U.S. dampened risk appetite, while gains in energy stocks helped cushion some losses.
The S&P/TSX Composite Index (.GSPTSE), lost 0.6% to 36,344.52 points at 9:49 a.m. ET.
The U.S. attacked Iran's Larak Island in the Strait of Hormuz on Sunday and Tehran responded by attacking two U.S. air bases in Jordan, sending oil prices up over 3%.
Energy stocks in Canada (.SPTTEN), rose 2.3%, the biggest boost to the TSX.
Technology stocks (.SPTTTK), lost 1.8%, with e-commerce giant Shopify (SHOP.TO), at the bottom of the benchmark index.
The materials sector (.GSPTTMT), shed 2%, tracking a dip in prices of precious and base metals.
The sector remains on track to lead monthly gains, up over 25%. This has put the TSX on track for a fifth consecutive monthly gain, which could be its biggest since February.
Developments in U.S.-Canada trade ties are also on investors' radar.
"There's a bit of a tug of war going on right now. You've got the positive influence of higher commodity prices, offset by the fact that an elongated trade war with the U.S. will have negative ramifications for both countries' growth and earnings," said Art Hogan, chief market strategist at B. Riley Wealth.
Markets awaited a crucial U.S. employment report that could influence bets on the country's interest-rate hike next month, after Federal Reserve Chair Kevin Warsh reiterated the central bank's stance on fighting inflation in his Jackson Hole speech on Friday.
The Bank of Canada will announce its next policy decision on Wednesday and is widely expected to keep interest rates on hold at 2.25%.
Domestic employment figures and S&P Global's business manufacturing survey will also be in focus this week.
Reporting by Purvi Agarwal in Bengaluru
