CANADA STOCKS-TSX edges up on positive US inflation and domestic GDP data

Updated at 10:02 a.m. ET/ 1402 GMT

By Nikhil Sharma

Aug 30 (Reuters) - Canada's main stock index rose slightly on Friday as investors welcomed favourable U.S. inflation and domestic GDP datasets, while major losses in energy sector diluted overall gains.

At 10:02 a.m. ET (14:02 GMT), the Toronto Stock Exchange's S&P/TSX composite index .GSPTSE was up 26.47 points, or 0.11%, at 23,253.96.

The U.S. Personal Consumption Expenditure index, the Federal Reserve's favoured inflation measure, rose moderately 2.5% in July on an annual basis, solidifying hopes of an interest-rate cut at the September policy meeting.

Money markets broadly expect a 25-bps cut by the Fed month. 0#FEDWATCH

Meanwhile, the Canadian economy grew faster-than-expected at 2.1% on an annualized basis in the second quarter due to higher government wages, business investment and consumers spending on services.

Canadian stocks were set for a positive month as the economy exhibited slight resilience along with a slump in inflation, creating a scenario for the Bank of Canada to trim its rates for the third time.

Bets are high for a 25-basis-point cut at the Canadian central bank's policy meeting on September 4. 0#BOCWATCH

"A downgrade to GDP in June and preliminary estimate that GDP was unchanged again in July imply that third-quarter growth will be much weaker than the Bank is forecasting," Stephen Brown, deputy chief North America economist at Capital Economics.

"The odds still just about favour a smaller 25bp cut week, but we wouldn't be surprised by a 50bp move."

Canada's energy sector .SPTTEN lagged its peers and declined 1.7% tracking losses in oil prices. O/R

The capped communication .GSPTTTS led the sectoral gains with 0.6% rise. The financials sector .SPTTFS, with a 29% index weighting, rose 0.5% and was set for its third consecutive record-breaking session.

The banking sector benefitted from recent earnings reports from the major domestic lenders.

Among individual stocks, Laurentian Bank of Canada LB.TO fell 2.2% after the lender reported smaller third-quarter profit.

(Reporting by Nikhil Sharma in Bengaluru; Editing by Vijay Kishore)

((Nikhil.Sharma@thomsonreuters.com;))