4 Min Read
* TSX gains 0.29 percent to 12,186.35
* Pares gains after hitting highest level since Sept. 2008
* Energy posts biggest rise as crude oil rises above $86 (Adds Canadian dollar movements in paragraph 5, declining sector in paragraphs 11-13)
By Ka Yan Ng
TORONTO, April 5 (Reuters) - Toronto's main stock market index rose to an 18-month high on Monday before paring gains, as rising oil prices and firm U.S. economic data bolstered hopes for a sustained recovery.
Investors welcomed fresh reports that showed the U.S. services sector grew above expectations in March and pending homes sales accelerated more than anticipated in February. [ID:nN05117920].
The reports reinforced optimism stirred by Friday's news that U.S. nonfarm payrolls had risen at the fastest pace in three years, the strongest signal yet that the U.S. economic recovery is gaining a solid footing. [ID:nN01126422]
The brightening economic outlook helped push oil to an 18-month high on Monday, rising above $86 a barrel and sent the TSX's heavily weighted energy sector up 1.85 percent. [O/R] Suncor Energy Inc (SU.TO) and Canadian Natural Resources (CNQ.TO) each gained more than 2 percent.
The positive sentiment and higher oil price helped lift the Canadian dollar to a 20-month high against the greenback and its highest point since it was at parity in July 2008. [CAD/]
The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE finished up 35.29 points, or 0.29 percent, at 12,186.35. Earlier, it hit 12,203.39, its highest since September 2008.
Suncor Energy shot up 2.62 percent to C$35.22, and Canadian Natural Resources jumped 2.12 percent to C$79.89.
The day started strongly with all sectors advancing. Eight of 10 main groups ended higher.
"Towards the end of the day here we're probably having some sober second thoughts as people take some profits for the day," said Michael Sprung, president at Sprung & Co. Investment Counsel.
"There is a realization out there that not everything is smooth sailing at the moment. The global economy still has to deal with Greece, Portugal and their compatriots," he said, referring to debt woes faced by some European countries.
The index's weighty financials group was one of the weak spots, dropping 0.7 percent, and may have been hurt by a report that the world's large economies were close to agreeing on a global tax on banks.
The Financial Times reported on Monday that British Prime Minister Gordon Brown played down expectations of a deal at the Group of 20 meeting in Toronto in June but that he wanted an accord struck at the G20 summit in Seoul in November, along with capital rules to reinforce banks against a future crisis. [ID:nLDE6330CV]
With most European markets closed on Monday for an extended Easter long weekend, market volumes were lighter than usual.
$1=$1.00 Canadian Reporting by Ka Yan Ng; Editing by Peter Galloway