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TORONTO (Reuters) - Canada's main stock index advanced on Thursday, led by gains in financials and telecoms, as bullish quarterly profit reports from major lenders and strong economic data from the United States drove the market.
A jump in telecoms shares also lifted sentiment. Investors concluded that a move by Verizon Communications (VZ.N) to buy out the rest of its stake in Verizon Wireless from Britain's Vodafone Group (VOD.L) will likely force the U.S. heavyweight to shelve its plans to enter the Canadian market.
The U.S. economy grew more quickly than expected in the second quarter, helped by a surge in exports, bolstering the case for the Federal Reserve to begin dialing back its bond buying program.
Investor anxiety about Syria eased a little after signs pointed to a delay in military action by at least several days while the case was laid out to U.S. and British lawmakers.
But that pulled down the price of oil, weighing on shares of the energy producers.
Royal Bank of Canada (RY.TO), Toronto Dominion Bank (TD.TO) and Canadian Imperial Bank of Commerce posted earnings that topped estimates on robust retail lending and wealth management income. The three stocks had the biggest positive influence on the market.
RBC and TD also raised their dividends.
No matter how challenging the circumstances, the banks have been delivering consistent results and raising their dividends, said Allan Small, senior investment adviser at Dundee Wealth, who views banks stocks as attractive investments though not bargains at these levels.
"Banks have been the rock of many of my clients' portfolios," he added. "If I had to think of a sector of the market that I could rely on, I need to look no further than the Canadian banks."
The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE closed up 97.51 points, or 0.77 percent, at 12,704.73.
Eight of the 10 main sectors on the index were higher.
Financials, the index's most heavily weighted sector, jumped 1.4 percent.
TD added 2.7 percent to C$89.93, RBC climbed 1.2 percent to C$65.24, and CIBC rose 2.8 percent to C$82.66.
The materials sector, which includes mining stocks, climbed 0.5 percent. Gold-mining shares were up 1.2 percent despite a fall in bullion. <GOL/>
Telecoms shares jumped 2.2 percent, helped by gains in the three biggest industry players. Rogers Communications Inc (RCIb.TO) gained 3 percent to C$42.01, BCE Inc (BCE.TO) added 2.3 percent to C$43.44, and Telus Corp (T.TO) rose 2.5 percent to C$33.10.
"It's a short-term positive for BCE, Rogers and Telus," Small said.
"The valuations have come down a little bit but not to the point where I would call them dirt cheap," he added. "However, as a good income and growth investment, telecoms still work."
With the price of oil declining, shares of energy producers lost 0.4 percent. Suncor Energy Inc (SU.TO) fell 1 percent to C$36.10.
Editing by Kenneth Barry and Leslie Gevirtz