* TSX up 30.08 points at 10,706.80
* Financials lead TSX to slim gain
* Canadian economy contracts in May (Adds details and comments)
By Frank Pingue
TORONTO, July 31 (Reuters) - Toronto's main stock index clung to a modest gain on Friday morning in choppy action as investors were torn between differing GDP reports from Canada and the United States ahead of a long weekend in most of Canada.
Helping to keep the index up was data that showed the U.S. economy contracted less than expected during the second quarter. [ID:nN31416560] But figures that showed Canada's economy contracted for a tenth straight month in May, and by more than expected, limited the index's gain. [ID:nN31434455]
"The market is caught in a real tug-of-war between two forces," said Irwin Michael, portfolio manager at ABC Funds.
"But keep in mind that today is also month end and it's a long weekend so a lot of people are not showing up ... and in consequence markets can be very volatile."
The Toronto Stock Exchange will be closed on Monday.
The TSX index's heavily weighted financials group was 0.79 percent higher as a recent string of strong corporate earnings have helped support the view that the global economy may be on the path to recovery.
Shares of Royal Bank of Canada (RY.TO) were up 1.4 percent at C$51.43, while National Bank of Canada (NA.TO) shares were up 1.8 percent at C$58.26.
At 10:25 a.m. (1425 GMT) the S&P/TSX composite index .GSPTSE was up 30.08 points, or 0.28 percent, at 10,706.80. Shortly after the open it fell by as much as 50 points.
($1=$1.08 Canadian) (Editing by Peter Galloway)