CANADA STOCKS-Canada's main index slips amid Fed rate cut uncertainty, Middle East tensions

(Updates to close)

By Nivedita Balu

Oct 7 (Reuters) - Canada's main stock index closed lower on Monday, hit by falling utility stocks as investors scaled back expectations of a big rate cut from the U.S. Federal Reserve in November amid rising tensions in the Middle East.

The Toronto Stock Exchange's S&P/TSX composite index was down 60.12 points, or 0.25%, at 24,102.71.

Expectations of a larger cut by the Federal Reserve have diminished after Friday's strong U.S. jobs data that allayed concerns about a slowdown in the world's largest economy.

"After that stronger-than-expected jobs number on Friday, you really see a lot of the shorter-term traders and shorter-term investors take a little bit of profit, especially with the increase in geopolitical risk in the Middle East right now," said Alfred Lee, deputy chief investment officer at Toronto-based Q Wealth Partners.

"Liquidity is really still in the driver seat at this point," he said.

Markets currently see an 85.4% chance for a 25-basis-point rate cut by the Fed in November, with another similar-sized cut expected in December.

This week, investors await U.S. Consumer Price Index (CPI) figures for clues to the Fed's policy adjustment cycle and the kickoff of third-quarter earnings season with reports from banks.

Spotlight will also be on Canada's unemployment data on Friday as investors look for clues on the Bank of Canada policy decision later in the month.

Among sectors, rate-sensitive utilities was the worst hit with a 1.75% decline, hurt by nearly 5% drop in shares of energy provider Emera (EMRAF), while the materials sector also fell significantly.

The energy sector gained 1.8%, continuing its rally as oil prices extended gains on fears of a wider Middle East conflict causing potential disruption to exports from the region.

Shares of TD Bank rose 0.5% after analysts at Cormark Securities raised their target price, making it the only big six bank to end in the green on Monday.

(Reporting by Nikhil Sharma in Bengaluru; Editing by Leroy Leo and Anna Driver)