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TORONTO (Reuters) - Canada's main stock index climbed to its highest in almost three years on Tuesday as comments by Russian President Vladimir Putin helped mitigate concerns of an imminent military conflict in Ukraine and fueled gains in most of the index's major sectors.
Offering further support, shares of Enbridge Inc (ENB.TO) jumped after the pipeline company said it will nearly double capacity on a major crude export line to the United States through a C$7 billion ($6.3 billion) replacement program.
Although Putin defended Russia's actions in Crimea, global markets took comfort from his statement that military force would be the last resort in Russia's dealings with Ukraine.
With the easing of tensions, oil and bullion prices dropped after gaining in the previous session as investors withdrew some safe-haven positions. Volatility, seen through the lens of the S&P/TSX VIX index .GSPVIXC, also fell sharply.
"We're seeing a little bit of relief with the toning down of the actions in Ukraine, at least for the moment," said Michael Sprung, president of Sprung Investment Management. "But that's going to continue to overhang the market for some time."
Sprung sees a choppy ride ahead for Toronto stocks, whose benchmark index is up about 4.9 percent so far in 2014.
"Overall, there could be further gains this year, but we could see a few setbacks in the interim," he said. "We're hopeful that the United States continues to recover and that Canada's economy will be dragged along with it."
The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE closed up 77.12 points, or 0.54 percent, at 14,289.86, after touching its highest level since early 2011 earlier in the day. Nine of the 10 main sectors on the index were higher.
Scotiabank reported a 6 percent rise in quarterly profit on the back of recent acquisitions and higher lending volumes, and it increased its quarterly dividend.
The lender's results rounded out Canadian banks' quarterly earnings season, which showed the industry had been able to sustain profits despite concerns about high levels of consumer debt.
"The banks have done surprisingly well," Sprung said. "The credit conditions have held up better than expected. The banks have been pretty good at controlling costs, and they benefited from higher trading volumes over the last quarter."
Shares of Valeant Pharmaceuticals International Inc (VRX.TO) rose 2.1 percent to C$162.20, and were a major factor in the index's advance.
Editing by Peter Galloway