June 19, 2009 / 9:02 PM / 8 years ago

CANADA STOCKS-TSX rises as banks jump on economic optimism

* TSX rises 166.45 points to 10,287.95

* Bank shares do bulk of the heavy lifting

* TSX ends week down 3.4 percent (Adds details)

By Frank Pingue

TORONTO, June 19 (Reuters) - Toronto’s main stock index followed bank shares to a second straight higher close on Friday, but it still finished lower on the week, ending a stretch of four consecutive weekly gains.

Financial shares, which make up about 33 percent of the index, added to gains they made on Thursday, when data offered hope that the recession-hit U.S. economy is stabilizing and that lending will soon increase.

Shares of Royal Bank of Canada (RY.TO), the key driver behind the two-day rally, was up 2 percent at C$46.00, while Bank of Nova Scotia (BNS.TO) rose 2.5 percent to C$41.30.

The financials index ended up 2 percent.

The week got off to a rocky start with selloffs of more than 240 points in two of the first three sessions. That prompted some analysts to say that the TSX was finally set to relinquish some of the massive gains recorded since it fell to a five-year low in March.

“Things looked pretty grim for a while so the fact that we got two back-to-back days of strength definitely brings the spirits back up,” said Ian Nakamoto, director of research at MacDougall, MacDougall & MacTier.

The TSX entered the week on a four-week surge that included a runup to near an eight-month high of 10,726.01 last week. That high put it 43 percent above the five-year low it stumbled to in early March.

The S&P/TSX composite index .GSPTSE closed 166.45 points, or 1.64 percent, higher at 10,287.95. For the week the index shed 3.4 percent.

Also helping to prop up the TSX were shares of gold-mining companies, which got a boost from a modest gain in gold futures. The materials group, which houses mining shares, led all sectors with a gain of 2.69 percent.

Goldcorp (G.TO) shares jumped 4 percent to C$39.55, while shares of Barrick Gold Corp (ABX.TO) followed with a gain of 3 percent to 38.64.

$1=$1.14 Canadian Editing by Peter Galloway

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