* TSX muted

* Stella-Jones downgraded to sector perform; shares fall

* US CPI due on Thursday

July 8 (Reuters) - Canada's main stock index was subdued on Monday as declines in resources shares were countered by rate-cut optimism ahead of U.S. inflation data and Congressional testimony from Federal Reserve Chair Jerome Powell this week.

At 10:28 a.m. ET (1428 GMT), the S&P/TSX composite index was up 1.33 points, or 0.01%, at 22,060.36.

The materials sector fell 0.6% as gold prices declined on profit-booking after bullion crossed a one-month high in the previous session.

Lower oil prices weighed on the energy sector, which dipped 0.2% as hopes for ceasefire in Gaza eased supply disruption worries.

The heavy-weight financial and consumer discretionary sectors were among the best performers, rising 0.3% and 1% respectively.

Wall Street indexes also rose on Monday, with S&P 500 and Nasdaq hitting intraday record highs.

U.S. jobs data on Friday showed job growth was moderating, firming bets of an interest-rate cut by the Fed in September.

Markets will closely assess Powell's comments during his semi-annual testimony, alongside the U.S. Consumer Price Index (CPI) reading, expected later this week.

"(The Fed) rather make a mistake on holding rates higher for longer and tipping the economy into somewhat of a recession versus cutting too early and having inflation kind of pick up on them again", said Denis Taillefer, senior portfolio manager at Caldwell Investment Management.

Another earnings season is set to commence, with big U.S. banks scheduled to report their quarterly earnings on Friday.

After the Bank of Canada trimmed rates last month, market participants are now pricing in a 61.5% chance of another cut at its next meeting on July 24.

Among individual stocks, pressure-treated wood product firm Stella-Jones' shares declined 2% after RBC cut its rating to 'sector perform' from 'outperform'. (Reporting by Nikhil Sharma in Bengaluru; Editing by Shreya Biswas)