CANADA STOCKS-Soft landing hopes help TSX recoup much of weekly loss

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TSX ends up 0.7%, at 20,519.37

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Energy adds 2.5%; oil settles 0.6% higher

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Technology advances 2%

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Celestica jumps for a second day

(Updated at market close)

By Fergal Smith

July 28 (Reuters) - Canada's main stock index clawed back nearly all of its weekly decline on Friday, helped by gains for resource and technology shares, as U.S. data showing cooling inflation bolstered hopes that the economy could avoid a severe downturn.

The Toronto Stock Exchange's S&P/TSX composite index ended up 133.9 points, or 0.7%, at 20,519.37. For the week, it was down 0.1%.

"There's been a lot of talk about the resilience of the economy in recent weeks," said Elvis Picardo, a portfolio manager at Luft Financial, iA Private Wealth. "Given the fact that inflation seems to be decelerating, I think investors are definitely in a risk-on mode at the moment. This is pinned on hopes for a soft landing."

Wall Street also rose as U.S. annual inflation slowed considerably in June, likely pushing the Federal Reserve closer to ending its fastest interest rate hiking cycle since the 1980s.

Separated data showed Canada's economy grew 0.3% in May but likely contracted in June.

"We are seeing that appetite for risk assets in the performance of some of the energy stocks ... Energy stocks seem to be coming back to life," Picardo said.

The Toronto market's energy sector rallied 2.5% as oil settled 0.6% higher at $80.58 a barrel, while the materials group, which includes precious and base metals miners and fertilizer companies, added 1.2%. It was helped by higher gold and copper prices.

Technology was also a standout, advancing 2%. Shares of electronics company Celestica Inc jumped 15.2%, its second day of sharp gains.

In contrast, shares of TC Energy Corp fell 4.3% after the Keystone pipeline operator said it would spin off its liquids business to focus on transporting natural gas. (Reporting by Fergal Smith in Toronto and Siddarth S in Bengaluru; Editing by Shweta Agarwal, Shilpi Majumdar and Alistair Bell)