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* TSX up 0.1 pct at 9,880.72
* Gain follows 4 percent rally on Monday
* Financials, up 1.7 pct, lead TSX higher
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By Jennifer Kwan
TORONTO, May 5 (Reuters) - Toronto's main stock index ended slightly higher on Tuesday after touching its highest level in almost 6 months, as a firmer financial sector overcame weak energy issues, which fell as oil prices sagged.
Six of the index's 10 main sectors were higher, including the key financials group, which rose 1.7 percent, and the consumer discretionary sector, up 1.3 percent.
Financials shrugged off caution south of the border over the U.S. bank stress test results, due May 7. A source familiar with official talks said U.S. regulators have deemed that about 10 of the 19 U.S. banks being stress tested will need to raise more capital. [ID:nN04553413]
"Right now the Canadian banks are perceived to be stronger and have better regulation and processes than their U.S. counterparts," said Steve Ibel, institutional equities trader at Beacon Securities, in Halifax, Nova Scotia.
The results, which are expected to be closely watched, could surprise on the downside, warned Elvis Picardo, analyst and strategist at Global Securities in Vancouver.
"Sentiment still remains positive but I think there's an undercurrent of caution ahead of the stress test results," he said.
The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE closed up 10.35 points, or 0.1 percent, at 9,880.72. Earlier, it hit 9,918.93, its highest level since early November.
In corporate news, results that helped lift the TSX included Loblaw Companies (L.TO). The grocery store operator posted a jump in quarterly profit as it benefited from rising food price inflation and an extra week of sales, sending its shares up 7.6 percent to C$35.31. [ID:nN05294253]
Entering the session, the TSX had risen about 30 percent from a low in early March, after adding nearly 4 percent on Monday.
In recent sessions, the index's rise has been partly based on the belief that the global economy will bounce back later this year.
That view was reinforced by U.S. Federal Reserve chairman Ben Bernanke on Tuesday when he said the three-year U.S. housing bust may be near a bottom and the recession should end this year, as long as there is no relapse of the credit crunch. [ID:nN05470010]
But the index had seesawed for most of Tuesday as limpness in the price of oil spurred a decline in the energy group, while the index's recent run-up also prompted some traders to sell to lock in gains.
Crude prices CLc1 settled lower at $53.84 a barrel after hitting a 2009 high as bulging oil inventories and falling energy demand outweighed fragile hopes for an economic recovery. [ID:nSP351504]
The big energy group fell 1.5 percent and materials dropped 0.6 percent.
Energy companies topped the list of decliners, including EnCana (ECA.TO), down 1.6 percent at C$59.02, and Canadian Natural Resources (CNQ.TO), down 1.7 percent at C$59.85. Goldcorp (G.TO) fell 1.5 percent to C$33.83. (Reporting by Jennifer Kwan; Editing by Jeffrey Hodgson)