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By Leah Schnurr
TORONTO, May 6 (Reuters) - Oil and gas companies led the way higher for the Toronto Stock Exchange on Tuesday, helping the main index climb nearly 1 percent as crude oil prices notched another record high.
Suncor Energy (SU.TO) was among the biggest gainers, up C$4.62, or 4 percent, at C$121.12 as the price of oil flew up over $122 a barrel on a weaker U.S. dollar and concerns over supply.
The Toronto market's heavily weighted energy sector jumped 3.3 percent. Canadian Natural Resources (CNQ.TO) was up C$4.05, or 4.6 percent, at C$92.00, and Canadian Oil Sands Trust COS_u.TO added C$3.68, or 8.3 percent, to C$48.18.
Crude settled up $1.87 at $121.84 a barrel, easing back from a record $122.73 reached earlier in the day. However, Goldman Sachs forecast oil could hit $200 a barrel within the next two years.
"How high can it go? Who knows," said Andrew Martyn, portfolio manager at Davis-Rea.
The S&P/TSX composite index .GSPTSE closed up 139.96 points, or 0.98 percent, at 14,414.30 with half its 10 main sectors higher.
The materials sector, home to resource issues, rallied 1.2 percent, while the base metals mining subindex gained 2.4 percent, pulled up by oil's momentum. Teck Cominco TCKb.TO rose C$1.48, or 3.2 percent, to C$48.18.
"The mining sector, the gold sector also got boosted, meaning that the whole commodities game seems to be back for who knows how long," said Ian Nakamoto, director of research at MacDougall, MacDougall & MacTier.
"We keep saying it's a fad, but (the oil price) comes down and starts to move back up," said Nakamoto, noting that ultimately it's underlying supply and demand that will make a price level sustainable.
Methanex MX.TO shares jumped C$3.02, or 12.4 percent, to C$27.40 after the methanol supplier upped its quarterly dividend by 11 percent and said it will buy back up to 10 percent of its common stock.
Sun Life Financial (SLF.TO) weighed on the index after the insurer warned of a difficult year ahead as it reported that credit market troubles and a strong Canadian dollar stung its operating earnings.
Sun Life finished down C$1.76, or 3.6 percent, at C$47.44, while the financial sector overall gave up 0.5 percent.
Also on the downside, BlackBerry maker Research In Motion RIM.TO slid C$2.37, or 1.8 percent, to C$132.25.
Market volume was 393 million shares worth C$7.6 billion. Advancers outpaced decliners 890 to 693. The blue chip S&P/TSX 60 index .TSE60 closed up 8.71 points, or 1.03 percent, at 855.12.
On Wall Street, stocks rallied after U.S. home finance company Fannie Mae FNM.N sought to reassure investors over the outlook for the credit and housing markets.
The Dow Jones industrial average .DJI rose 51.29 points, or 0.4 percent, to 13,020.83, while the Nasdaq composite index .IXIC was up 19.19 points, or 0.78 percent, at 2,483.31. ($1=$1.00 Canadian) (Editing by Rob Wilson)