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* TSX up 24.97 pts, or 0.2 pct, at 12,726.23
* Highest level since Sept. 8, 2011
* Materials, energy issues lift index
* U.S. jobless claims hold near 4-yr lows
* Euro zone contraction forecast for 2012
By Jon Cook
TORONTO, Feb 23 (Reuters) - Toronto's main stock index was slightly higher at midday on Thursday as strong bullion prices lifted gold miners and encouraging U.S. jobs data offset forecasts showing the euro zone economy will shrink this year.
Most of the index's top 10 main sectors were higher, led by the gold-miner-heavy materials group, which rose 0.5 percent as bullion traded near $1,800 an ounce.
Yamana Gold led the group higher, rising 3.7 percent to C$18 a day after the gold producer reported an increase in fourth-quarter adjusted profit and said it would increase its annual dividend by 10 percent.
The country's two largest gold miners, Barrick Gold and Goldcorp, were also up. Barrick rose 0.7 percent to C$49.86 and Goldcorp was up 0.9 percent at C$49.73.
The index was also boosted by oil and gas issues as Brent crude futures hit a record 93.60 euros ($120) a barrel on increased tension between Iran and the West. Suncor Energy was the biggest heavyweight gainer, rising 2.1 percent to C$36.38.
"Canada is very favorable here, because you are in the best portion of seasonality for the energy sector," said Sid Mokhtari, a market technician at CIBC World Markets.
The oil and gas sector has risen more than 7 percent this year and Mokhtari said March and April are traditionally the best months of the year for gains.
"It's reasonable to assume that the U.S. dollar would drift lower and help the commodities like oil and gold and that should be a positive for Canada," he added.
At 12:20 (1720 GMT), the Toronto Stock Exchange's S&P/TSX composite index was up 24.97 points, or 0.2 percent, at 12,726.23, its highest level in five months.
Gains were supported by U.S. data that showed jobless claims were unchanged last week, holding at the lowest level since the early days of the 2007-09 recession.
Signs that the battered U.S. labor and housing markets are healing has helped the TSX jump more than 5 percent so far this year. Figures on Wednesday showed U.S. home resales surged to a 1-1/2 year high in January.
In Europe, upbeat economic data from Germany was overshadowed by the European Commission's forecast on Thursday that showed euro area GDP was expected to shrink 0.3 percent this year, compared with a previous forecast for 0.5 percent growth.
Canadian financial shares were flat. Bank of Montreal was up 0.6 percent to C$58.67, while Bank of Nova Scotia slid 0.2 percent to C$53.61.
In earnings news, SXC Health Solutions Corp shares surged more than 6 percent to C$67.45 after the pharmacy benefit manager reported a 60 percent jump in quarterly profit on strong contract wins, prompting the company to predict 38 percent revenue growth this year.
Loblaw Cos Ltd shares plunged 6 percent to C$35.12 after fourth-quarter profit at Canada's No. 1 food-store chain came in short of analysts' estimates due to discounting and higher costs.
The Loblaw drop pulled the index's consumer goods and services group down nearly 2 percent. The defensive sector has struggled this year after a strong 2011.
"Now cyclicals are coming back into the market and offense is kicking in and when offense comes in your defense will have to take the backburner," Mokhtari said.