Investing.com - Canada’s main stock market hovered around the flatline on Thursday, after the index climbed in the prior session thanks to cooling U.S. inflation data and a Bank of Canada interest rate cut that helped offset concerns over the economic impact of escalating trade tensions between Ottawa and Washington.

The S&P/TSX 60 index standard futures were mostly unchanged at 11:30 ET.

On Thursday, the Toronto Stock Exchange ’s S&P/TSX composite index was down marginally, losing 38 points or 0.15%. This comes after yesterday’s session ended higher by 175 points or 0.7%, bouncing back from its lowest closing level in four months a day earlier.

Underpinning sentiment was a move by the Bank of Canada to slash its key interest rate by 25 basis points to 2.75% in a bid to help establish a bulwark in the Canadian economy against the effect of U.S. President Donald Trump’s tariffs.

But policymakers warned that the ongoing trade spat between the U.S. and its neighbor to the north is set to weigh on Canadian economic activity and push up domestic prices.

"[H]eightened trade tensions and tariffs imposed by the United States will likely slow the pace of economic activity and increase inflationary pressures in Canada," the BoC said, adding that the broader outlook has been subject to "more-than-usual" uncertainty because of the rapidly-evolving nature of Trump’s tariff policies.

Trump’s expanded levies on all U.S. steel and aluminum imports came into effect on Wednesday, a move that intensified already heated international trade tensions and sparked a response from both Canada and the European Union.

Canada, the largest supplier of steel and aluminum to the U.S., announced retaliatory tariffs on the U.S. amounting to C$29.8 billion.

Additionally, Trump threatened to place 200% tariffs on alcohol imports from the European Union in response to the bloc rolling out retaliatory countermeasures against his steel and aluminum levies, causing European alcohol stocks to fall rapidly.

Investors are also interested in the outcome of a meeting between U.S. Commerce Secretary Howard Lutnick, U.S. trade representative Jamieson Greer, and Doug Ford, the Premier of the Canadian province of Ontario, that takes place today.

U.S. stocks fall

U.S. stocks fell, as investors gauged Trump’s tariff plans and analyzed the release of new producer price data.

By 10:30 ET, the S&P 500 was down nearly 50 points or 0.9%. The NASDAQ Composite lowered 228 points, or 1.29%, while the Dow Jones Industrial Average had fallen by 310.5 points, or 0.75%.

The main indices were mixed at the close of trading on Wednesday, with the benchmark S&P 500 and tech-heavy Nasdaq 100 rising due in large part to surge in technology and tech-related stocks. The blue-chip Dow Jones Industrial Average ended lower following a choppy session.

Investors were keen to analyze how U.S. producer prices rose at a slower-than-anticipated annualized rate in February, while the measure was unexpectedly unchanged month-on-month, according to data that will likely factor in to how the Federal Reserve views inflation during a time of increased uncertainty around Donald Trump’s trade policy.

The next twist in the ongoing tariff saga could come on Thursday, when Commerce Secretary Howard Lutnick and U.S. trade representative Jamieson Greer are expected to meet with Doug Ford, the Premier of the Canadian province of Ontario.

Oil stabilizes

Oil prices were choppy, as traders assessed how tariff-driven economic uncertainty could impact crude demand and a bigger-than-expected draw in U.S. gasoline stocks.

By 11:40 ET, the Brent futures contract had dipped by 0.70% to $70.65 a barrel, while Crude Oil WTI Futures fell by 0.87% to $67.10 a barrel.

On Wednesday, both of the contracts rose by around 2% on U.S. government data that showed oil and fuel inventories at tighter-than-anticipated levels. U.S. gasoline inventories dropped by 5.7 million barrels, above estimates for a draw of 1.9 million barrels, while distillate stocks also declined.

Gold hits record high

Gold prices rose to a new high Thursday in trading as Trump’s tariff threats kept bullion’s safe-haven appeal intact.

Spot gold moved up 1.43% to $2,975.52 per ounce, while gold futures expiring in April gained 1.45% to $2,989.54 an ounce by 11:45 ET.

(Scott Kanowsky also contributed to this article)