* TSX ends up 0.7% at 20,906.52

* For the week, index declines 0.4%

* Financials rally 1.2%

* Real estate ends 2.6% higher

Jan 19 (Reuters) - Canada's main stock index rose on Friday, clawing back much of its weekly decline, as rising hopes of a soft economic landing bolstered the shares of financial and real estate companies.

The Toronto Stock Exchange's S&P/TSX composite index ended up 149.79 points, or 0.7%, at 20,906.52. For the week, the index was down 0.4%, after posting last Friday its highest weekly closing level in 21 months.

Wall Street also rallied, with the S&P 500 notching a record closing high.

"There is more excitement about a soft landing," said Angelo Kourkafas, a senior investment strategist at Edward Jones. "Economic data continues to come in strong in the U.S. while inflation expectations ... continue to decline."

U.S. consumer sentiment rose to the highest level in 2-1/2 years amid growing optimism over the outlook for inflation and household incomes.

Domestic data showed retail sales falling 0.2% in November from October but initial estimates pointed to a rebound in December.

Financials, the most heavily-weighted sector on the Toronto market, climbed 1.2% and technology ended 1.6% higher.

The Bank of Canada is due to make an interest rate decision on Wednesday. The central bank will wait until at least June to cut its key interest rate as price pressures remain sticky, according to a Reuters poll.

"Regardless if its March, April or a few months later we are going to be see a major pivot towards less restrictive policy and that's a positive for equities," Kourkafas said.

Real estate, which tends to be particularly sensitive to the outlook for interest rates, was up 2.6%.

Investment management company Blackstone agreed to take Tricon Residential Inc private in a $3.5 billion deal. Tricon's shares jumped 27.3%. (Reporting by Fergal Smith in Toronto and Purvi Agarwal in Bengaluru; Editing by Tasim Zahid and Deepa Babington)