The index recovered some losses in afternoon trade after deadly blasts in Brussels had prompted a flight to safe-haven assets.

The Toronto Stock Exchange's S&P/TSX composite index <.GSPTSE> settled down 67.60 points, or 0.50 percent, at 13,493.49. Seven of its 10 main sectors retreated.

Travel-related stocks fell, with Air Canada (>> Air Canada) down 2.3 percent at C$8.95 and Westjet Airlines Ltd (>> WestJet Airlines Ltd.) lost 2.6 percent at C$19.50. Canadian National Railway (>> Canadian National Railway Company) fell 2.4 percent to C$79.56. Industrials fell 1.4 percent.

Rick Hutcheon, president and chief operating officer at RKH Investments, said the index has likely turned a corner from a January trough but that investors can expect choppy moves higher from here.

"You're going to see a hopscotch market, I don't think the whole market's going to go all at once," he said. "It's going to be very rotational."

"The oil sector is probably a good place to be right now for a long-term bet," he added. "If you have the long-term horizon, it's probably time to start tip-toeing back into the high-quality names."

Canadian Natural Resources (>> Canadian Natural Resources Limited) gained 1.2 percent to C$36.03 and TransCanada Corp (>> TransCanada Corporation) rose 1.4 percent to C$49.13, even as oil settled little changed. The overall energy sector was slightly lower. [O/R]

Veresen Inc (>> Veresen Inc) advanced 7.2 percent to C$9.27 after the energy company said it would pay a dividend.

Islamic State claimed responsibility for suicide bomb attacks on Brussels airport and a rush-hour metro train in the Belgian capital on Tuesday which killed at least 30 people, with police hunting a suspect who fled the air terminal.

The most influential weights on the Canadian index also included some of the biggest banks, with Royal Bank of Canada (>> Royal Bank of Canada) falling 0.7 percent to C$74.79 and Toronto-Dominion Bank (>> Toronto-Dominion Bank) off 0.6 percent at C$55.35.

The financials group slipped 0.6 percent.

Investors had been waiting on a federal budget released after the close that showed Canada's new Liberal government would run a deficit nearly three times larger than promised during last year's election, with no target date for returning to a balanced budget.

(Reporting by Alastair Sharp Editing by W Simon and James Dalgleish)

By Alastair Sharp