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CANADA STOCKS-TSX slides to 2-week low as U.S. inflation data surges

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(New throughout, updates prices, market activity and comments)

* TSX ends down 289.07 points, or 1.4%, at 20,274.82

* Posts lowest closing level since May 20

* Technology sector falls 3.4%

* Financials end 2.1% lower

By Fergal Smith

TORONTO, June 10 (Reuters) - Canada's main stock index tumbled on Friday to a two-week low as stronger-than-expected U.S. consumer price data stoked fears that the Federal Reserve would continue with its aggressive policy tightening to tame soaring inflation.

The Toronto Stock Exchange's S&P/TSX composite index ended down 289.07 points, or 1.4%, at 20,274.82, its lowest closing level since May 20. For the week, it lost 2.5%.

Wall Street was also down sharply as the U.S. consumer price index (CPI) accelerated to an annual rate of 8.6% on record-high gasoline prices the rising cost of services.

"While some investors might have had expectations that inflation was in the process of peaking, the numbers in fact were hotter than anticipated and that is driving the market lower today," said Brandon Michael, senior investment analyst at ABC Funds.

The data bolstered market expectations for a second consecutive half-percentage-point interest rate hike by the Fed at a policy announcement next Wednesday.

Trading should remain volatile until then, Michael added.

Meanwhile, data showed Canada's economy adding 40,000 jobs in May, entirely in full-time work, and the jobless rate edging down to a record low of 5.1%, raising speculation that the Bank of Canada could hike by as much as three-quarters of a percentage point next month.

Higher interest rates are a particular headwind for technology, reducing the value to investors of the future cash flows that companies in that sector are expected to produce.

The Toronto market's technology sector fell 3.4%, while heavily-weighted financials ended 2.1% lower.

Energy was down 1.7% as oil settled 0.7% lower at $120.67 a barrel.

Helping to limit the TSX's decline was gains for the materials group, which includes precious and base metals miners and fertilizer companies. It added 1.9%, as gold rallied. (Additional reporting by Amal S in Bengaluru; Editing by David Gregorio)