CANADA STOCKS-TSX rise on tech gains; Fed rate cut bets offset US shutdown concerns

(Updates with morning prices)

By Sanchayaita Roy

Oct 3 (Reuters) - Canada's main stock index hit a fresh record high on Friday, as technology shares climbed, while growing hopes of a near-term Federal Reserve rate cut overshadowed concerns over a U.S. government shutdown.

Toronto's S&P/TSX composite index was up 0.7% at 30,368.02 points, notching its sixth straight day of gains and eclipsing Thursday's record high. The benchmark index was also on track for a weekly gain.

The prolonged U.S. government shutdown, the 15th since 1981, enters its third day on Friday, delaying key economic data including the non-farm payrolls report scheduled for release on Friday.

However, investors have mostly shrugged off the shutdown, partly because they have historically had a limited impact on economic growth and market performance.

Meanwhile, traders have turned to alternative data from public and private sources, which so far point to a sluggish U.S. labor market, keeping bets for a Fed rate cut alive.

"The Fed will cut rates again... I also think the Bank of Canada will cut interest rates again because we too have a slowdown in jobs growth," said Allan Small, senior investment advisor of the Allan Small Financial Group with iA Private Wealth.

Canada's services economy contracted at a steeper pace in September as businesses shed jobs and outstanding work sank to a five-year low, according to data released on Friday.

It was the 10th straight month that the index was below the 50 threshold, signaling continued contraction in the sector.

Data on Wednesday showed that Canada's manufacturing sector contracted at a steeper pace in September.

"If BoC does not cut rates at least one more time this year that would be a big mistake... all these soft numbers, it tells that the central bank as well as our government have more work to do," Small said.

The BoC last month lowered its benchmark interest rate to a three-year low of 2.50% and said it would be ready to cut again if risks to the economy increased in coming months.

On the TSX, technology sub-index was up 1.2%, tracking gains in Wall Street peers. E-commerce company Shopify (SHOP) surged 4.8%.

Materials stocks rose modestly, tracking gains in gold prices. (Reporting by Sanchayaita Roy in Bengaluru; Editing by Leroy Leo)