CANADA STOCKS-TSX tumbles as rate hike worries weigh

(Adds comments, company news, updates numbers)

By Shashwat Chauhan

Sept 29 (Reuters) - Canada's main stock index slid on Thursday, after rallying in the previous session, as fears of a steep economic downturn persisted amid aggressive monetary policy tightening by global central banks.

At 09:53 a.m. ET (1353 GMT), the Toronto Stock Exchange's S&P/TSX composite index slid 270.8 points, or 1.45%, to 18,378.12. The index had logged its biggest one-day advance since May 13 on Wednesday after the Bank of England moved to support Britain's beaten-down government debt market.

Central banks around the world have been battling soaring inflation this year, pushing them to aggressively raise interest rates even at the risk of causing an economic slowdown.

The Bank of Canada (BoC) has said it would begin publishing a summary of its monetary policy deliberations, similar to the U.S. Federal Reserve, starting next year, which economists said could help avoid unnecessary market volatility.

Traders are pricing in a 65.3% chance of a 50 bps hike by the BoC next month. The Canadian central bank has already raised its overnight lending rates by 300 basis points in six months.

"It's seasonally a strong period for the markets. However, it's a very fluid situation with a lot of geopolitical concerns, earnings, and interest rates. So, investors are on edge a little bit here, but we have reason to be optimistic getting into October," said Brandon Michael, senior analyst at ABC Funds in Toronto.

"Many investors are viewing the parabolic moves in yields in the U.S. dollar to be unsustainable and emblematic of a blow off top."

Economy-sensitive sectors led declines on the TSX, with heavyweights energy, financials and industrials stocks down 1.4% each even as data showed Canadian economic activity surprisingly edged up 0.1% in July.

A preliminary estimate had projected gross domestic product to be flat in August.

Among stocks, Linamar Corp and Magna International dropped 8.8% and 5.9%, respectively, after Scotiabank trimmed its price targets, saying a likely recession in 2023 and higher energy prices in Europe may lead to lower sales volumes of auto makers and component manufacturers, and pose headwinds to margins.

Ero Copper Corp jumped 1.6% after it announced the discovery of a regional nickel sulphide system within the Curaçá Valley over an initial strike length of five kilometers. (Reporting by Shashwat Chauhan; editing by Uttaresh.V)