(Updates after Fed news, adds strategist comment, updates prices)
* TSX ends up 224.44 points, or 1.59 percent, at 14,301.80
* Banks, rails and oil stocks lead the rally
By Alastair Sharp
TORONTO, July 29 (Reuters) - Canada's main stock index jumped on Wednesday, helped by gains in banks, railways and oil companies as crude prices bounced from near six-month lows and the Federal Reserve left the door open for a September interest rate hike.
The U.S. central bank said the economy and job market of Canada's main trading partner continues to strengthen, which was seen as a baby step toward higher rates.
"The Fed tone was encouraging, that's a big thing, crude oil is up, (and) you're seeing bargain hunting in some of the beaten-down names," said Elvis Picardo, a strategist at Global Securities in Vancouver. "It's a bunch of positive factors."
Oil prices settled higher, recovering from multi-month lows, after U.S. government data showed a surprisingly large crude stockpile draw that signaled the market may have been wrong in predicting slumping demand for energy.
The energy, financial and industrial sectors all clocked gains of more than 2 percent. Those groups featured among laggards during a seven-day slump the index snapped on Tuesday.
"Energy was hit so hard, on Monday it felt like a bottomless pit ... (so) it stands to reason that if there's a temporary turnaround in sentiment for the sector, it'll be led by the big names," Picardo said.
Suncor Energy jumped 4.3 percent to C$34.62, while Canadian Natural Resources Ltd lost 1.3 percent to C$30.75.
The Toronto Stock Exchange's S&P/TSX composite index ended up 224.44 points, or 1.59 percent, at 14,301.80.
The most influential movers were financials. Royal Bank of Canada rose 2.8 percent to C$75.65, Toronto-Dominion Bank advanced 2.9 percent to C$52.64, and Bank of Nova Scotia added 3.2 percent to C$63.36.
Norman Levine, managing director at Portfolio Management Corporation, said he was particularly positive on Canadian life insurers because of their U.S. exposure as they will benefit from higher U.S. interest rates, and with large U.S. operations, will also benefit from improvements in the U.S. economy.
Manulife Financial Corp gained 2.1 percent to C$22.98 and Sun Life Financial Inc rose 2.6 percent to C$42.40.
Canadian National Railway Co gained 1.8 percent to C$81.08 and Canadian Pacific Railway Ltd rose 2.8 percent to C$209.26.
Levine cautioned investors not to pin their hopes on commodity stocks, since prices were not going to recover anytime soon.
Bombardier Inc gained 7.1 percent to C$1.95 despite the company denying a report that said the plane and train maker was in talks with German engineering group Siemens AG around a rail merger. (Additional reporting by Solarina Ho; Editing by Andrew Hay and James Dalgleish)