* TSX rises but off early gain of more than 1 percent
* Weighty bank shares lead index
* Higher oil prices push up energy shares
By Frank Pingue
TORONTO, Feb 23 (Reuters) - Toronto's key stock index was slightly higher at mid morning on Monday as key bank shares rose alongside their U.S. counterparts, while energy issues were boosted by a rally in oil prices.
Reports that the U.S. government could end up with a big stake in Citigroup's (C.N) common stock, a sign it is ready to avert further paralysis of the financial system, gave a lift to the influential Canadian financial sector [ID:nSP428876].
"The U.S. government is indicating that they are going to try and help out banks, and saying they need a banking system, so that put a little bit of a pulse in some of the Canadian banks here," said Bruce Latimer, trader at Dundee Securities.
"And there's not a lot of news out so far today, but at least the market is seeing an absence of bad news, which is a good thing."
The financial sector, which accounts for about a third of the TSX's key index, led all groups with a 2.6 percent gain, followed by a 1 percent rally in the energy sector.
At 10:05 a.m. (1505 GMT), the S&P/TSX composite index .GSPTSE was up 39.75 points, or 0.5 percent, at 7,983.61 Earlier, it had rallied as much as 1.03 percent.
In the energy group, shares of Canadian Natural Resources (CNQ.TO) were up 2.3 percent at C$39.16.
$1=$1.25 Canadian Reporting by Frank Pingue; editing by Peter Galloway