Sept 15 (Reuters) - Canada's main stock index slipped on Tuesday as higher oil prices and surging bond yields fueled concerns about a prolonged inflation ahead of the Federal Reserve's interest rate decision on Wednesday.
The S&P/TSX Composite Index (.GSPTSE), fell 0.67% to 35,464.37 points at 10:29 a.m. ET, with energy sector (.SPTTEN), among the only gainers.
The U.S. 10-year Treasury yield surged above 5%, near a two-decade high, ahead of the Fed's policy meeting starting later in the day.
With the U.S.-Iran conflict showing no signs of easing, investors fear the energy supply disruption could persist, keeping inflationary pressures elevated.
Traders are pricing in more than a 90% chance of a Fed rate hike on Wednesday, according to CME Group's FedWatch tool.
"If they raise rates, I cannot see them just raising once. Raising a quarter point tomorrow does not do anything and it just signals to the market that it's one of maybe two, three or four (hikes)," said Allan Small, senior investment director, Allan Small Financial Group with iA Private Wealth.
The materials sector (.GSPTTMT), including metal miners, slipped 1.2%, tracking softer precious metal prices.
Heavily weighted on the TSX, the financials (.SPTTFS), edged 0.6% lower.
Canadian home sales fell in August, pressured by rising mortgage rates and increased economic uncertainty, data showed on Tuesday.
The real estate shares (.GSPTTRE), fell 1.6%, while consumer discretionary stocks (.GSPTTCD), slipped 2%, leading sectoral losses.
Prime Minister Mark Carney unveiled immediate tax write-offs for most new capital investments in a bid to spur growth and attract foreign capital.
Reporting by Darshan Kumar and Utkarsh Hathi in Bengaluru; Editing by Shailesh Kuber
