(Updates with details, analyst comment)
By Jonathan Spicer
TORONTO, Jan 30 (Reuters) - The Toronto Stock Exchange's main index was slightly lower on Wednesday morning, with energy stocks rising ahead of the U.S. Federal Reserve's much-anticipated decision on interest rates later in the day.
Suncor Energy (SU.TO) was the biggest weighted gainer, up 2.7 percent, or C$2.49, to C$93.59 after its board approved a C$20.6-billion investment to ramp up crude oil production.
Suncor, the operator of Canada's second-largest oil sands project, also struck a deal with the Alberta government on royalties.
The Fed was set to announce its rate decision at 2:15 p.m. (1915 GMT), and Toronto and other stock markets were pricing in a 50 basis-point cut, although some observers are expecting a milder 25-point trim following last week's surprise cut of 75 points.
"It will be very disappointing if they only did a quarter in the United States -- that would really upset the market," said Joe Ismail, technical analyst at Maison Placements Canada.
The S&P/TSX composite index .GSPTSE was down 7.89 points, or 0.1 percent, at 13,038.54. Earlier in the morning, it had fallen more than 80 points.
Materials stocks, down 0.2 percent, led the fall with Potash Corp of Saskatchewan (POT.TO) off C$3.27 at C$137.49.
Iamgold Corp (IMG.TO) tumbled 41 Canadian cents to C$9.06 after the miner said 2008 production will dip, and costs will rise. For details, see: [nN30187908]
The financial sector dipped 0.4 percent, while industrials slipped 0.9 percent.
On the upside, energy firms advanced 0.5 percent, information technology added 0.4 percent, and the utilities group was up 0.1 percent.
Commodity markets were mixed ahead of the Fed decision, but U.S. crude oil and natural gas futures were both slightly higher.
The TSX index has risen in five of the past six days, recovering from an early-year freefall brought on by the prospect of a slowing global economy.
"In this short-term run here, I think our Canadian market can easily move up to the 13,200-point area," Ismail said.
$1=$1.00 Canadian Reporting by Jonathan Spicer; Editing by Peter Galloway