CANADA STOCKS-TSX drops amid broad selloff after CPI data disappoints

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December CPI numbers dash hopes of early rate cut

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Barrick Gold down on lower preliminary gold production in 2023

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TSX falls 0.6%

(Updated at 10:07 a.m. ET/ 1507 GMT)

By Purvi Agarwal and Shubham Batra

Jan 16 (Reuters) - Canada's main stock index fell on Tuesday, led by losses in the materials sector, while investors were disappointed that core inflation rose more than expected in December ahead of next week's interest rate decision by the Bank of Canada.

At 10:07 a.m. ET (1507 GMT), the Toronto Stock Exchange's S&P/TSX composite index was down 134.13 points, or 0.64%, at 20,927.75.

Materials shares were the top losers on the index, falling 1.5%, as prices of most base metals dropped on a stronger U.S. dollar and concerns over future demand after top consumer China skipped an expected rate cut.

Data on Tuesday showed Canada's annual inflation rate rose to 3.4% in Dec. from 3.1% in Nov., driven mainly by higher gasoline prices last month.

While the headline numbers were in line with expectations, the sticky core measures show that overall inflation is likely to come down slowly.

"CPI has come down quite a bit from the peaks. It's going to get a little bit more difficult to get it back to the 2% range. But my forecast is that the Bank of Canada is still likely to cut interest rates", Mike Archibald, vice president and portfolio manager at AGF Investments, told Reuters.

"My assumption is that it will happen, likely sometime in the second quarter, but we have to continue to watch the data."

Money markets now see a 34% chance that the BoC would start cutting interest rates in March, down from nearly 50% before the figures were released, but still see a high chance of a 25-basis-point reduction in April.

Among individual stocks, Barrick Gold slumped 4.6% after the company reported preliminary gold output of 4.05 mln ounces in the financial year 2023, below its forecast and analysts' estimates of 4.16 mln ounces.

First Quantum Minerals fell 3.4% after the Canadian miner said it plans to conserve capital after it was forced to halt production at its Cobre Panama copper mine. (Reporting by Shubham Batra in Bengaluru; Editing by Tasim Zahid)