CANADA STOCKS-TSX rebounds but on course for biggest weekly drop in a year

(Updates with market open)

By Ragini Mathur

Dec 20 (Reuters) - Canada's main stock index bounced back on Friday, though it seemed headed for its biggest weekly drop in more than a year, as investors fretted about the direction of global interest rates in the coming year, a possible U.S. government shutdown and slowing global economic growth.

The Toronto Stock Exchange's S&P/TSX composite index rose 0.7% to 24595.68 points by 10:34 ET (1534 GMT), up for the first time in seven sessions.

Gold miners and material shares led a recovery in Canadian stocks at the end of a volatile week in global markets.

"Wednesday's Fed meeting certainly put some fear into the markets that inflation is not tamed to the extent that we would like to see and there is a threat of fewer interest rate cuts going forward," said Michael Sprung, president at Sprung Investment Management.

"There is a fair amount of uncertainty, not the least to say that in Canada and now in Europe. The threat of tariffs is shaking confidence in the economic outlook of those areas."

The Fed on Wednesday

cut

its policy rate by 25 basis points as expected but forecast only two rate reductions in 2025, in a nod to the economy's continued resilience and still-high inflation.

Investors were also grappling with the possibility of a partial U.S. government

shutdown

and political uncertainty in Canada after Finance Minister Chrystia Freeland stepped down earlier this week, citing differences with Prime Minister Justin Trudeau on managing finances.

New Finance Minister Dominic LeBlanc

said

the country's financial reserves are sufficient to support businesses and individuals if the United States imposes a major new tariff.

Canada's retail sales in October were marginally lower than expected as a jump in new car sales offset consumers' reduced purchases at supermarkets, grocery stores and wine shops, data

showed

.

Among single stocks, BlackBerry's shares surged 16.8% after the security software firm beat quarterly revenue estimates. (Reporting by Mathur in Bengaluru; Editing by Mohammed Safi Shamsi)