* TSX up 31.85 pts, or 0.3 pct, at 11,880.60 * Highest level since May 4 * Expectations of ECB rate cut boost financials By Jon Cook TORONTO, July 4 (Reuters) - Canada's main stock index hit a two-month high in volatile trade on Wednesday morning as financial shares rose, offsetting losses from the energy group, on hopes for more monetary stimulus from central banks to help counter the euro zone crisis. A day after the Toronto Stock Exchange's S&P/TSX composite index recorded its biggest single-day percentage gain this year, activity was subdued with U.S. markets closed for the Independence Day holiday and ahead of policy decisions from the European Central Bank and the Bank of England on Thursday. "We have a lot of high hopes in the investment world that central banks ride to the rescue as they have before," said John Stephenson, senior vice president at First Asset Investment Management Inc. The financial group led gains, rising 0.5 percent as investors anticipated the ECB will cut rates and that it may also inject fresh funds to help boost the region's struggling economy. Weak euro zone data on Wednesday added to expectations of a rate cut. Activity in Germany's services sector unexpectedly stagnated in June, while business expectations in France slumped to the lowest level in three years. Canada's major lenders were the main benefactors of the central bank hopes, with Royal Bank of Canada climbing 0.5 percent to C$53.37, Toronto-Dominion Bank up 0.4 percent at C$80.04, and Bank of Nova Scotia rising 0.5 percent to C$53.59. Around 10:30 a.m. (1430 GMT), the TSX was up 31.85 points, or 0.3 percent, at 11,880.60, its highest level since May 4. Paring gains was the heavily weighted oil and gas sub-index, which edged 0.1 percent lower as U.S. crude fell 68 cents to $86.98 after settling on Tuesday at its highest close since May 30. Trican Well Service led losses, plunging 10 percent to C$11 after RBC cut its target price on the stock to C$15 from C$17 after the Canadian oil field services firm forecast a bigger-than-expected second-quarter loss. "The service companies have been miserable investments for the last five or six months," Stephenson said. "The reality is we're very challenged in the gas environment in North America, but particularly in Canada."