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* TSX up 89.44 points, or 0.70 percent, at 12,821.83 * Eight of 10 main index sectors advance * RBC gains 0.9 percent after results * Gold miners follow bullion prices lower By John Tilak and Alastair Sharp TORONTO, Feb 28 (Reuters) - Forecast-topping quarterly results from Royal Bank of Canada and Toronto-Dominion Bank, the country's two biggest banks, helped drive Canada's main stock index higher on Thursday, overcoming weakness in gold miners. The market was also supported by positive economic data from the United States, Canada's biggest trade partner, which spurred gains in oil and gas and industrial shares. Royal Bank rose 0.9 percent to C$64.02 after it reported a 12 percent rise in quarterly profit on the back of stronger loan growth and capital markets income, prompting the bank to raise its dividend by 5 percent. "It seems that the overall message is that everything is peachy rosy," said Levente Mady, a senior portfolio manager at PI Financial Corp in Vancouver. "The earnings are there and the momentum is there. It's hard to argue with that." Some analysts have been wary about the prospects for gains in bank stocks due to some weakness in the Canadian economy and because the index's financial services sector was already up about 5 percent this year. "Despite concerns about the housing slowdown in Canada, the leveraged consumer and the potential fall in consumer spending, these banks are still reporting pretty healthy numbers," said Elvis Picardo, strategist and vice president of research at Global Securities in Vancouver. He argued, however, that the rally in bank shares has made valuations expensive, and investors might do well to take profits. The Toronto Stock Exchange's S&P/TSX composite index closed up 89.44 points, or 0.70 percent, at 12,821.83. Eight of the 10 main sectors on the index were higher. Shares of Toronto-Dominion Bank rose 0.7 percent to C$84.85 after Chief Executive Ed Clark poured cold water on the idea that the bank might buy Royal Bank of Scotland's Citizens Bank unit. The country's No. 2 lender reported a 21 percent rise in quarterly profit, driven by loan growth at its Canadian and U.S. retail banks. It raised its dividend by 5 percent. Canadian Imperial Bank of Commerce stock dropped 0.9 percent to C$83.14 after Canada's fifth-largest lender reported a 4 percent drop in quarterly profit due largely to a charge for a legal settlement. Industrial shares climbed 1.2 percent, with Canadian National Railway Co gaining 2.9 percent to C$104.66 and playing the biggest role of any single stock in leading the index higher. CN Rail, up about 16 percent since the start of the year, said it was teaming with LBC Tank Terminals to increase its shipments of heavy Alberta crude. The index's materials sector, which includes mining stocks, slipped 0.3 percent and was the biggest single drag on the market. The group is down about 9 percent since the start of the year, making it the worst performing sector of 2013 so far. As has happened several times this week, the biggest decliners were gold-mining stocks, which followed the price of bullion lower. Picardo said that while "gold seems to have lost its safe-haven allure," gold-mining stocks might be a smart investment at current levels. "At these prices, the sector is factoring in the worst-case scenario. We think there's very good value in gold stocks," he said. Barrick Gold Corp, the world's biggest gold miner, fell 1.1 percent to C$31.27. In other company news, Valeant Pharmaceuticals International Inc said it is in active talks to make more acquisitions, while posting a quarterly loss. The drug maker's shares rose 1.9 percent to C$69.55.