(Adds portfolio manager quotes, details throughout; updates prices to close)
* TSX ends down 0.69 point at 15,454.23
* Index climbs 1.9 percent on the week
* Seven of the TSX's 10 main groups end lower
By Fergal Smith
TORONTO, Sept 22 (Reuters) - Canada's main stock index was flat on Friday but ended the week up 1.9 percent as the heavyweight financials group gained ground, offsetting losses for telecom shares.
The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE ended down 0.69 of a point at 15,454.23, one day after posting its highest close since early June. For the week it advanced 1.9 percent.
"We have got our head above water," said John Kinsey, portfolio manager at Caldwell Securities. "I think it is a little bit of catch-up on our part."
The index has gained just 1.1 percent this year, held back by lower oil prices and a stronger Canadian dollar, which squeeze profit margins for the country's many commodity producers.
That leaves the TSX lagging many other major markets, including the S&P 500 .SPX , which has climbed 11.8 percent.
The loonie has retreated this week after a Bank of Canada policymaker said the currency's strength will be a factor in future interest rate decisions. But data on Friday showing a pick-up in inflation in August still left the central bank with room to raise rates again. financials group, which tends to benefit from higher rates, gained 0.3 percent on Friday to reach its highest since April.
Bank of Nova Scotia BNS.TO added 0.5 percent to C$79.72 while finance company ECN Capital Corp ECN.TO jumped 5.0 percent to C$3.96 after closing a deal to acquire Service Finance Holdings.
Air Canada AC.TO pushed 4.2 percent higher to C$27.51 as investors bought into its plan to expand routes and cut some prices to compete against low-cost new entrants.
The materials group, which includes precious and base metals miners and fertilizer companies, added 0.7 percent, as gold stocks climbed.
Gold prices recovered from a four-week low on a bid for safety as North Korea said it might test a hydrogen bomb over the Pacific Ocean after U.S. President Donald Trump vowed to destroy the reclusive country. seven of the index's 10 main groups ended lower, including losses for defensive sectors, such as telecoms and utilities, which tend to underperform as rates rise.
The telecoms group ended 0.8 percent lower, with Rogers Communications Inc RCIb.TO declining 1.3 percent to C$63.73.
The energy group dipped 0.1 percent even as oil prices ended close to their highest in months. Major producers meeting in Vienna said they may wait until January before deciding whether to extend output curbs beyond the first quarter.