TORONTO (Reuters) - A surge in the price of oil helped Canada's main stock index gain on Wednesday, as its weighty oil and gas companies rose.
During the session, the Toronto Stock Exchange's S&P/TSX composite index hit a fresh seven-month high, although it later pared those advances to finish up 0.4 percent.
"The TSX is taking its cue from what's going on in crude oil," said Shailesh Kshatriya, an associate director for client strategies for Russell Investments Canada.
U.S. crude jumped nearly 6 percent to a 2015 high after U.S. inventory data came in lighter than expected. [O/R]
But Kshatriya warned that just as the Canadian index can rise on the fortunes of its energy industry, which accounts for more than 20 percent of its weight, so too can it fall.
"If there is another potential leg down in crude oil prices a lot of momentum that the energy trade has been garnering over the last several session could quickly reverse," he said.
Among the most influential oil and gas stocks were Suncor Energy Inc, which added 1.9 percent to C$40.67, and Canadian Natural Resources, which gained 1.9 percent to C$42. The index's energy sector overall climbed 2.6 percent.
"It's been a good day for crude oil, and that's helping Canada. For the moment, it looks as though crude oil is bottoming out," said Colin Cieszynski, chief market strategist at CMC Markets.
The index ended the session up 61.59 points, or 0.40 percent, at 15,450.87. It hit 15,524.75 at one point, its highest since Sept. 16.
Bank of Canada Governor Stephen Poloz held interest rates steady and suggested no further cuts are imminent on Wednesday, adding that a key risk to his outlook is that the oil price shock packs a more profound economic punch than he expects.
Russell's Kshatriya said that consumer names that have found favor recently could also be hit in that scenario.
"The longer and the more protracted the potential negative impact is for the Canadian economy from low oil prices and what have you, the more enthusiasm for discretionary names has to be questioned," he said.
Both discretionary and staples group were off more than 1 percent. Meanwhile the heavily weighted financials group rose 0.9 percent and the hefty materials group, home to mining companies, climbed 0.4 percent.
Additional reporting by John Tilak and Solarina Ho; Editing by Peter Galloway and James Dalgleish